- EUR/GBP is extending the positive streak, still below 0.90.
- GBP fades the earlier up move on news regarding Irish backstop.
- Scotland’s Court ruled in favour of B.Johnson.
The Sterling continues to fade the earlier spike and is now supporting another bull run in EUR/GBP to the 0.8985/90 band.
EUR/GBP stays focused on Brexit
The European cross keeps the march north unabated so far on Thursday, although a test/surpass of the critical barrier at 0.89 the figure still remains elusive.
The British Pound has given away initial gains after EU officials discarded news regarding an offer to solve - albeit temporarily - the issue around the key Irish backstop.
In the meantime, the Scottish Court has ruled in favour of UK PM B.Johnson. Now, Johnson is not forced to ask for an extension of Article 50 in case of a no deal by October 19.
In addition, PM B.Johnson suggested MPs to debate the Brexit deal in Parliament on Saturday 19th October, just after the key EU Summit on October 17th-18th.
In the UK calendar, the focus of attention will now be on tomorrow’s release of GDP figures as well as results from Industrial Production and Manufacturing Production.
Later today, the publication of the FOMC minutes is expected to drive the sentiment in the global markets.
What to look for around GBP
Volatility around the Sterling is expected to remain well and sound for the time being amidst alternating Brexit headlines. In the meantime, investors continue to gauge a potential extension of the Brexit deadline (despite B.Johnson’s opposition), a call for early elections and the lack of progress around the Irish backstop, all keeping the ‘no deal’ scenario well on the table. While the negotiation between both parties is expected to continue in the next days, and on another side, BoE’s (former hawk) M.Sunders stressed the likelihood of a rate cut if the UK economic outlook worsens regardless of the Brexit outcome. His view could keep rallies in GBP somewhat limited for the time being and carries the potential to spark a division in the central bank’s ranks, as the ‘Old Lady’ remains reluctant to factor in a probable ‘hard Brexit’ into its projections.
EUR/GBP key levels
The cross is gaining 0.28% at 0.8991 and faces the initial hurdle at 0.9004 (38.2% Fibo of the May-August rally) seconded by 0.9020 (55-day SMA) and finally 0.9127 (23.6% Fibo of the May-August rally). On the flip side, a drop below 0.8882 (21-day SMA) would expose 0.8829 (200-day SMA) and then 0.8785 (monthly low Sep.20).
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