EUR/GBP comes down to test lows near 0.8500

EUR/GBP rejected at 0.8650

The European cross is losing ground since Monday, when it was once again rejected from the key resistance area in the mid-0.8600s. Renewed buying interest around the British pound is plotting against any occasional bullish attempts in the cross for the time being, which has now opened the door for a new visit of YFD lows in the mid-0.8400s.

The demand for GBP has been bolstered since May’s speech late in January, the Supreme Court ruling and yesterday’s overwhelming vote from the House of Commons, passing the Brexit bill without changes and thus allowing PM T.May to negotiate the exit of the UE under her terms. On the data front, German trade surplus shrunk more than expected in December, while Governor M.Carney is due to speak later (albeit unlikely on monetary policy).

EUR/GBP key levels

The cross is now losing 0.35% at 0.8502 and a break below 0.8488 (low Feb.1) would aim for 0.8464 (low Jan.20) and finally 0.8442 (200-day sma). On the other hand, the next hurdle aligns at 0.8557 (high Feb.8) ahead of 0.8594 (20-day sma) and then 0.8648 (high Feb.6).

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