EURGBP Weekly: Fighting against the parallel resistance-update

• Held significant resistance
  Reap for a retracement
  Brexit concerns intensified
  
  

The UK economy and the bond market re surrounded with the Brexit risk and in 1Q 2019 looks like it could be more challenging. The main theme for this week is the BOE meeting, but the underlying Brexit uncertainty theme remains the key driver for EURGBP.

The technical picture for the euro cross has not changed since a week. The daily oscillator suggests lower prices in the near term, and we watch appetite around the support zone 0.8950/0.8940.

On the upside, despite apprehension among traders increasing at 0.9020, a break above this level may pave the way for marginal higher prices through 0.9070 and trend resistance towards 0.9085/0.9100 the psychological level.

What next?

Now the erosion of the 0.9085-0.9100 thresholds is highly encouraging, but mixed daily indicators keep the bulls away. A break of these last barriers would be needed to initiate a more pronounced recovery to 0.9140 its 61.8% fib reaction. In our view, the resistance bar has moved from 0.8940/0.8970 to 0.9100/0.9140.

As we noted last week, we would be concerned if EURGBP could not push and close above 0.9140 over next week or two. That said, an inability for the euro cross to sustain a stronger tone against the 61.8% fib reaction could end up being lower. The flip side, 0.9260 and 0.9300 are the next destinations.