• Hopes of delayed Brexit/second referendum continue to underpin GBP.
• A modest uptick in the shared currency helped limit further downside.
• Tradres now eye Brexit motion debate/vote for some fresh impetus.
The EUR/GBP cross traded with a mild negative bias through the early European session and remained within striking distance of multi-month lows set in the previous session.
The cross extended its rejection slide from the 0.9100 handle, touched in early-Jan., and finally broke through the 0.8600 handle on Tuesday, falling to its an intraday low level of 0.8562 – the lowest since May 2017.
The recent reports on a possible delay to the fast-approaching Brexit deadline and (or) a second referendum turned out to be one of the key factors behind the British Pound’s outperformance against its European counterpart.
However, the prevalent US Dollar selling bias was seen lending some support to the shared currency and helped limit further downside, at least for the time being and amid highly near-term oversold conditions.
Moving ahead, today’s Brexit motion debate/vote in the UK parliament will not be looked upon for some meaningful impetus in absence of any major market moving economic releases, either from the Euro-zone or the UK.
However, given firming expectations for a softer Brexit, today’s event seems unlikely to be a game changer and the prevalent strong bullish sentiment around the British Pound might keep a lid on any attempted recovery.
Technical levels to watch
The 0.8560-50 region might continue to protect the immediate downside, below which the bearish trajectory could further get extended towards 0.8530-25 intermediate support en-route the key 0.8500 psychological mark.
On the flip side, attempted recovery back above the 0.8600 handle now seems to confront some fresh supply near the 0.8620-25 region, which if cleared might trigger a short-covering bounce towards the 0.8665-70 resistance.