EUR/GBP: bulls in control, will top side of channel break?

• EUR/GBP: bulls testing key resistance.
• EUR/GBP: politics remains the driving force.

EUR/GBP is making a minor recovery, holding onto the 0.89 handle and buoyed by the weekend news where Germany’s SPD party membership endorsed the leadership’s “Grand Coalition” plan with Chancellor Merkel, removing one potential political negative for the EUR. Currently, EUR/GBP is trading at 0.8903, down -0.42% on the day, having posted a daily high at 0.8951 and low at 0.8896.

EUR/GBP has been better bid at the start of the week, despite Italy’s election that has delivered the expected outcome of a highly fractured parliament between the rightist League/Forza Italia and the leftist 5SM. Analysts at Scotiabank explained that the League’s strong performance overall will give their anti-euro, anti-immigrant platform a high profile in any right-leaning government formation but the horse trading may take some weeks to play out." 

Brexit latest...

In terms of Brexit, the air is still unclear and a weight on sterling. PM May’s speech on Brexit last week still leaving a lot of detail to be clarified on how Brexit will work and how a UK economy striving its own trade agreements can relate to a more protectionist US.

EUR/GBP levels

EUR/GBP remains in the sideways channel flipping but testing the resistance here. The 0.9034 October 2017 high ahead of 0.9071/0.9175 61.8% and 78.6% Fibonacci retracements come as next key resistance. The December and January lows are located at 0.8689/87.