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​​​​​​​​Brexit Progress Countered by COVID Spread React

EURGBP
MNI (London)
  • GBP opened the week under pressure as market reacted to the failure to agree a Brexit trade deal, by the EU 'deadline' of Sunday night, as well as UK border closures due to a virulent COVID strain spread in England.
  • EUR/GBP spiked outside the topside of its 1.0% 10-dma envelope, pushing on to Gbp0.9118.
  • However, as has been noted, this cross doesn't like to hold outside of this 1.0% envelope for too long and it quickly eased back inside as GBP recovered.
  • A move by the UK side on fisheries at the Brexit talks, along with progress in talks to get the Dover-Calais border opened up, boosted GBP's recovery efforts and took the cross back to its technically key 10-dma at Gbp0.9070, closing the day at Gbp0.9093.
  • GBP drifted generally lower through Asia, allowing EUR/GBP to edge to Gbp0.9133 but was seen being pressed back toward Gbp0.9100 in early Europe.
  • Whilst rate remains above its 10-dma (current Gbp0.9077) it keeps the underlying tone buoyant.
  • Positive GBP react seen on release of UK GDP data but Brexit negotiations remain key for GBP direction along with reaction to UK COVID spread.
  • MNI Techs: EURGBP was volatile yesterday and with Sterling under pressure Monday, the cross rallied before stalling at 0.9218. Attention is on key resistance at 0.9230, Dec 11 high where a break would reinforce underlying bullish conditions and this would open 0.9292, the Sep 11 high. The cross is likely to remain volatile, initial support is at Monday's low of 0.9070. The key pivot support remains 0.8983, Dec 4 / 17 low. A break would be bearish.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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