EUR/GBP extends weekly gains above 0.8500

The euro is about to post the strongest weekly gain since early October against the pound. EUR/GBP rose every day of the week, and on Friday extended the rally above 0.8500. 

The pair peaked at 0.8538, the highest level in two weeks and the pulled back modestly. It was trading at 0.8530, up 0.45% for the day. 

The pound remains weak in the market and is among the worst performers of the week. On Friday, not even better-than-expected economic data from the United Kingdom helped the currency. The final estimation of Q3 GDP showed an expansion at 0.6% q/q against the 0.5% expected; it represented an upward revision from the previous reading of 0.5%. The current account deficit dropped during the third quarter, coming in at £-25.5bln versus the £-28.3bln expected. 

Concerns about the impact of Brexit over the UK economy continue to affect the pound. The formal exit from the European Union will start in 2017, but the process it likely to take years. 

EUR/GBP levels to watch 

The euro holds a bullish tone that could remain intact as long as price holds above a short-term uptrend line that currently stands around 0.8435/40. A break lower, could remove the positive momentum out of the euro. 

Now the pair is facing resistance around 0.8540. Above here, the next barrier, is seen at 0.8565/70, a consolidation above could open the doors to more gain. While to the downside, before the downtrend line, EUR/GBP could find support at 0.8510 (Dec 22 high) and 0.8450 (Dec 19 high).