EUR / GBP reverses and tests levels below 0.9000, critical days ahead

• EUR / GBP is about to end the week with gains, far from the peak.
• The pound regains strength as the EU and the UK continue negotiations.

The EUR/GBP it retraced further and bottomed at 0.8982, reaching a new three-day low. It then rallied to 0.9010. Speculation about Brexit continues to fuel volatility at the pound crosses.

A definition regarding Brexit is expected in the coming days, so the pound is exposed to rumors and speculation. The Euro weakens with EUR / USD retreating from multi-year highs to negative territory for the day.

From a technical perspective, the EUR / GBP broke a downtrend line around 0.9000 days ago, but the move showed some difficulties. A steady drop below 0.9000 would indicate a blur going forward. Key medium-term support is at 0.8860.

A decisive week ahead

Next week, a resolution on Brexit should be clearer. On Thursday, European leaders will meet to define Brexit and the Recovery Fund. High risk events.

Also, on Thursday, the European Central Bank will have its meeting. It is a private meeting as market participants await action. Analysts at TD Securities expect the ECB to keep its policy rate on hold, but to offer further easing through the PEPP and TLTROs. “For the PEPP, we are in line with the consensus of expecting a boost of 500 billion euros and a 6-month extension until the end of 2021. And for the TLTRO, we seek a 25 basis point reduction in the interest rate, plus an extension of one year until June 2022 ”.

Technical levels