EUR/GBP upside still capped by 0.8900, looks to UK politics

• EUR/GBP extends the weekly recovery to 0.8880.
• GBP-selling keeps sustaining the recovery.
• UK political concerns weigh on the Pound.

Increasing turmoil in the UK political arena is fuelling the downside pressure around the Sterling and is forcing EUR/GBP to advance to multi-day tops just below 0.89 the figure.

EUR/GBP focused on UK politics, Brexit

The British Pound resumed the correction lower this week, particularly after the recent decision by the UK Supreme Court to declare unlawful the suspension of Parliament by PM B.Johnson earlier in the month, as this move does not favour any soft outcome in the Brexit front.

On another front, there is no progress on the Irish backstop as of today, while the last words from EU officials in recent comments were not that auspicious, practically discarding potential solutions put forward by UK officials.

In the meantime, speculations abound regarding a probable call for a no-confidence vote against B.Johnson and the likelihood of early elections, all heavily weighing on GBP-sentiment.

In the docket, German GfK’s Consumer Climate ticked higher to 9.9 for the month of October, while ECB’s M3 Money Supply expanded more than expected at an annualized 5.7% during August.

EUR/GBP key levels

The cross is gaining 0.26% at 0.8879 and faces the initial hurdle at 0.8906 (50% Fibo of the May-August rally) seconded by 0.8959 (100-day SMA) and then 0.9032 (55-day SMA). On the flip side, a drop below 0.8785 (monthly low Sep.20) would expose 0.8667 (78.6% Fibo of the May-August rally) and finally 0.8488 (monthly low May 6).