EUR/GBP pushes lower below 0.90 after UK PM May's comments

Eren Sengezer FXStreet

After inching higher to a fresh weekly top at 0.9022, the EUR/GBP pair reversed course in the European morning and eased below the 0.90 handle as the GBP gathered strength against its peers on British PM Theresa May's recent remarks. At the moment, the pair is trading at 0.8970, losing 0.4% on the day.

Delivering a UK national briefing at the EU council meeting, May said that she was ambitious and positive about the Brexit negotiations. More importantly, May further added that the EU didn't need to be concerned over the current budget plan, as the UK was ready to honor the commitments made to the EU. Later in the session, Later in the day, the President of the European Council and the President of the European Commission will be speaking at a joint press conference at 12 GMT following the Article 50 discussion at the EU summit.

In addition to the GBP strength, the shared currency is having a difficult time finding demand on Friday. In fact, the Euro Index is losing 0.23% at 94.60 at the moment. Amid a lack of fresh catalysts, markets' focus will remain on the headlines coming from the summit. In the meantime, the ongoing political drama in Spain continues to keep investors away from the euro.

Spanish government to call election in Catalonia in late Jan/early Feb - El Confidencial

Technical outlook

"EUR/GBP suddenly shot higher and nears its early October high at .9034. If bettered, we will have to allow for the 61.8% Fibonacci retracement at .9093 to be reached,” wrote Axel Rudolph, Senior Analyst at Commerzbank, in a recent report.

“Support now comes in around the 38.2% Fibonacci retracement at .8961 and at the current October low at .8856. Directly below the support line at .8809 lies a major band of support which extends down from the .8747/43 July and September lows to the .8729 level. It contains the 200 day ma, 55 week ma, and the 2015-2017 uptrend," Rudolph further added.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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