- The emergence of new selling around the British pound pushed EUR / GBP to a week high.
- The EU-UK commission for the Northern Ireland protocol, Brexit nervousness weighed heavily on the British pound.
- A sustained move beyond a downtrend line will set the stage for additional gains.
The crossing EUR/GBP it caught some aggressive offers and spiked to week-long highs around the 0.8630 region in reaction to the latest Brexit headlines.
The British pound took a hit and weakened across the board after European Commission Vice President for Inter-Institutional Relations and Foresight Maroš Šefčovič commented on the Northern Ireland protocol. The UK has to comply with legal obligations on border controls and if it takes any unilateral action, the EU will react quickly, Šefčovič said.
This is due to speculation that the UK may delay plans to end the restrictions entirely on June 21 in light of the spread of the so-called Delta variant. The combination of factors weighed on the British pound, which in turn triggered a short hedging move around the EUR / GBP cross and led to a strong intraday rally of around 45 pips.
On the other hand, the shared currency benefited from the emergence of some fresh selling around the US dollar. This was seen as another factor that provided additional boost to the EUR / GBP cross. Apart from this, the strong bullish movement could further be attributed to some repositioning of trade ahead of the ECB policy meeting on Thursday.
From a technical perspective, the EUR / GBP cross was last seen flirting with short-term downtrend line resistance extending from April highs. A sustained move further will be seen as a further trigger for bullish traders and will set the stage for an extension of the recent bounce from strong horizontal support at 0.8565-60.
Technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
