Sharp reversal in sterling fortunes...>

EURO-STERLING: Sharp reversal in sterling fortunes Friday, following the

Salzburg meeting which seemed to dash hopes that the UK and EU were getting

close to a Brexit agreement, saw EUR/GBP rally hard up to Gbp0.8995, the move

seeing it make a brief show outside of its 10-dma 1.0% envelope, Friday coming

through at Gbp0.8992. This envelope top has now moved up to Gbp0.8999. Sterling

given some reprieve following PM May's hard line comments Friday, EU Donald Tusk

noted at the weekend the negotiating problems but added that an agreement is

still possible. Cross traded in Asia between Gbp0.8973/97, favouring the lower

end into Europe with early risk-off pressure on EUR/USD able to extend this

pullback to GBp0.8971. As has been noted, EUR/GBP likes to remain contained

within its 10-dma 1.0% envelope, though not offering support/resistance in

itself, it will usually prompt the rate to correct away if envelope

approached/broken. Month-end approaching, which could add some upside pressure

to the cross. Traders aware that US Comcast won the auction Saturday for control

of Sky in a deal worth Gbp39bn. Support Gbp0.8973/67 ahead of Gbp0.8950.

Resistance into Gbp0.9000.