EUR/GBP: rallies on Brexit negotiations heading right to the wire

There was no breakthrough on the key issue of how to avoid new visible border checks between Northern Ireland and the Republic of Ireland after Brexit, and EUR/GBP has popped as Brexit negotiations look set to continue to the bitter end. 

While the European Union and Britain have given themselves a few more weeks to break the deadlock in their Brexit talks, The current disagreements among member states are unlikely to be bridged before the end of the year making for a possible winter of discontent on both the streets of the UK and the pound. The next European Council summit meeting is on Dec. 13-14. European Union negotiator Michel Barnier believes a Brexit deal must be done by December to give parliaments on both sides of the Channel time to ratify it before Britain's scheduled exit on March 29.

Britain must simply pick

• France's Macron: Brexit is now a British political issue, no longer a technical one

There are many ways to skin a cat,” an EU diplomat working on the Brexit conundrum said. “But only so many — and we have looked at all of them. So it’s either the backstop or all of the United Kingdom staying inside our customs zone.”

“Now, Britain must simply pick.”

EUR/GBP levels

EUR/GBP is well on the way for a test above R1 having recovered nice, from the 0.8723 Fibonacci retracement which otherwise guards the 8700/.8697 June lows. 

"This rebound is viewed as corrective only and near-term rallies will find initial resistance at 0.8834 200 day ma", analysts at Commerzbank argued, which is between R2 and R3 that guard a break to 0.8913 a the 55-day ma - " EUR/GBP will now stay offered below here." The analysts added that the Elliott wave count is implying that the rebound will falter at 0.8835/65. Failure at 0.8697 would target the 0.8620 2018 low."