EUR / GBP trades around 0.9050

  • EUR / GBP spiked as high as 0.9140 on Monday, but has since reversed to around 0.9050.
  • However, as a Brexit deal is at stake, the pair is still trading around 40 pips or 0.4% on the day.

The EUR/GBP It is pretty much back to where it started the day it opened for the Asian session on Monday, at 095. A wave of pessimism over Brexit and then optimism has seen the pair swing between highs at 0.9140 and current levels around 0.9050, but such As it stands, the pair is still trading with gains of more than 40 pips or 0.4% on the day, given the higher gap at the reopen. trading after the weekend.

Boris will visit Brussels to close the Brexit deal

The Brexit saga continues. The failure of the EU and UK negotiators to reach an agreement over the weekend (the top three hot spots for fisheries, state aid and level playing field remain), combined with the much more pessimistic tone From officials on both sides of the bargain on the prospect of a Whole Deal contributed to the strong sterling sell-off that took place during the early part of the European session on Monday.

However, the news from the US session has been a bit more optimistic. Initially contributing to the change in sterling was the news that the UK could abandon its controversial internal markets and finance bill, both of which violate the withdrawal treaty signed with the EU last December, if a deal can be reached. . From an EU perspective, the existence of these two laws has tainted the negotiations, so an offer to withdraw them could help facilitate a deal, hence the positive reaction from the GBP at the time.

Still, this news in itself doesn’t bring a deal closer. That would mean progress on the three key issues mentioned above; fishing, equal conditions and state aid. Clearly, the negotiations have reached the point where intervention at the highest level is needed to make tough compromises and sacrifices. And that is exactly what could be about to happen, with British Prime Minister Boris Johnson leaving for Brussels to meet face-to-face with EU Commission President von der Leyen on Tuesday to push for a deal.

The two held a call today where Tuesday’s meeting was arranged and the news was positively received by GBP traders. Both Johnson and von der Leyen are likely to be interested in closing a deal ahead of the EU council’s summit meeting of EU27 leaders on Thursday.

However, if a deal can be struck, the positive reaction from the GBP could be tempered, or even reversed, if any of the “hard-line” EU countries (ie France) threatens to veto it for “giving too much. “to the British. In other words, what is acceptable to Johnson and von der Leyen may not be acceptable to other members within the EU, who will be in their power to veto approval of the deal and force a no-deal.

EUR / GBP continues to trend upward

The chances of a Brexit deal fading as the clock ticks can be seen in the recent EUR / GBP uptrend which has seen the pair retreat from lows below 0.8900 in late November to current levels around 0.9050. In fact, the pair has respected an upward trend that joins the lows of November 23, 24 and 25 and December 1 and 4. As long as a Brexit deal is in play, this uptrend should offer solid support.

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