- EUR / GBP breaks the resistance of 0.89940 and is approaching 0.9000.
- The pound weakens in the face of Brexit uncertainty and the Scottish independence referendum.
- The break of 0.9000 would improve the short-term bias of the euro.
The euro it has accelerated its recovery from the lows of 0.8865 earlier this week, appreciating to levels just below 0.9000. The pair is on track to gain 0.7% for the week, making up for lost ground after having depreciated in three of the past four weeks.
Brexit and Scotland weigh on the pound
The pound is broadly vulnerable in a small trading session due to Thanksgiving weekend in the US Brexit uncertainty and speculation of a new independence referendum in Scotland have undermined confidence in the British pound .
Another week has passed without any significant progress in the negotiation between the UK and the EU for a post-Brexit trade deal. With just five more weeks to go before the end of the transition period, the chances of a disorderly exit from the unions are greatly increased as positions on key issues like fisheries remain distant.
Beyond that, Scottish National Party leader Nicola Sturgeon announced on Friday that she wants to hold a second independence referendum “in the first part” of the next term, which begins next year. This has contributed to the weakening of the British pound against its main rivals.
EUR / GBP approaching major resistance at 0.9000
From a technical perspective, EUR / GBP has broken above the high of the last range of the day and is approaching a major resistance at 0.9000 (Nov 12-13 high). Above here, the negative pressure could ease, which could help push the pair towards 0.9050 / 65 (Nov 5 highs and 6 highs) and 0.9105 (Oct 12, 13 highs).
On the downside, a bearish reversal could find support at 0.8940 (November 25 high) and below here, 0.8860 (June, September and November lows) and 0.8800 / 10 (May 4, 11 highs).