EUR/GBP: downside bias persists with underbelly of EU risks

Currently, EUR/GBP is trading at 0.8507, down -0.77% on the day, having posted a daily high at 0.8641 and low at 0.8499.

EUR/GBP is extending the downside at the start of this week while markets remain in dollar positive mode which is hurting the euro while the pound remains somewhat resilient with much of the Brexit related downside already priced in. Markets are looking ahead at the risks associated with the EU subsequent from the pending elections in euroland between now and the middle of 2017. 

"The UK decision (by a slight majority) to leave the EU and the election of the populist-right Trump as US president (where he secured the necessary electoral college votes but did not win the most popular votes) are the first two steps on the trend, with the focus turning to Europe," explained analysts at Brown Brothers Harriman, adding, "We have long argued Europe was a man-made construct more than a geographic entity defined by Nature.  Monetary union was similarly a political construct and was designed to cope with the reunification of Germany.  We were able to help navigate the troubled waters when many thought that a Greek exit was imminent by appreciating the significance of political considerations, including will.  The trend toward nationalism, if that is what it is, questions precisely that political will."  

EUR/GBP levels

Spot is presently trading at 0.8507, and next resistance can be seen at 0.8520 (Daily Classic S1), 0.8527 (Yesterday's Low), 0.8554 (Monthly Low), 0.8554 (Weekly Low) and 0.8579 (Hourly 20 EMA). Next support to the downside can be found at 0.8499 (Daily Low), 0.8497 (Weekly Classic S1), 0.8468 (Daily Classic S2), 0.8420 (Weekly Classic S2) and 0.8408 (Daily Classic S3).