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EURGBP fell to an 11-Day low

Market Analysis

EURGBP,H4

EURGBP remains under strong pressure since last Wednesday,  tracking the ECB-driven price action of EURUSD. Meanwhile today, the pound is higher on Brexit-related news, with the UK’s junior minister of exiting the EU, Walker, saying earlier that a deal on a transition deal is “very close.” The pound is presently showing a gain over 0.3% against both the dollar and the euro. Cable lifted to a two-session high of 1.3903. The news from Walker comes as the EU leaders’ summit on March 22nd-23rd starts to loom large on the near horizon, and following that the two sides will look to hammer out a concrete agreement (on a future trading relationship, the Irish border and a transition period) before October this year, which would leave the 27 EU countries time to ratify it before March 29th next year, when the UK formally leaves the EU and, most likely, when a two-year transition period starts before the UK will fully break free of the single market, customs union, and the jurisdiction of the European Court of Justice.

EURGBP has been plunging since the reversal to the downwards noticed on Wednesday, at 0.8967 resistance level. The pair presented 3 consecutive Daily bearish candles, while today it has been captured traded below the significant 200-DAY MA, at 0.8888, and breaking earlier the 20-DAY MA at 0.8868. The latter was also a strong resistance area for the 2nd half of February. the next immediate Daily support comes at  0.8835. However despite the 3 day’s decline, the EURGBP is in an uptrend since January 25, with momentum indicators confirming the uptrend, by configurating positively.

The Intraday charts however strengthens the possibility of a continuation to the downside, with 20-period MA crossing below 50-period MA in the 4-hour chart. The short-term technical indicators are also endorsing the aggressive sell-off in the price action. The MACD  presents an increase to the negative momentum below zero, while Stochastic is holding within the oversold zone since thursday, suggesting that the negative movement continues.

Hence it is likely to see further losses, with next possible targets at 0.8840 and 0.8810. Conversely, only a break above 0.8920, could suggest that EURGBP is retracing to the upside again.

 

 

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Andria Pichidi

Market Analyst

HotForex

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