- Summary:
- The EURGBP pair was relatively unchanged as the market waited for the ongoing Brexit talks. Other eurozone countries have started to reopen
The EURGBP pair was little changed as the market paid attention to the ongoing Brexit talks, the fight between Germany and EU and the reopening plans by most EU countries.
Brexit talks ongoing
The third round of Brexit talks started yesterday as the clock runs out. The UK has less than two months to request for an extension of the transition period. Since the two sides have too many differences, some analysts believe that the chances of a no-deal Brexit are increasing.
At the same time, the two sides have traded accusations. The EU has said that the UK is not serious in these negotiations while the UK has accused the EU of hard handedness.
The core of these disagreements is that the UK wants to be treated as an equal of the European Union, something that the EU has rejected. Just last week, Michel Barnier said that the UK is a country of 66 million people negotiating with a bloc of more than 465 million people.
The two sides have also disagreed on fisheries, competition, and law. On fisheries, the UK wants to have the final say on who can fish in its waters. This is an important thing for the UK because most fishermen in Europe get more than 50% of their fish in UK territorial waters. On trade, the UK has said that it wants a Canadian-style agreement that removes tariffs and quotas on most goods.
EU countries reopening
The EURGBP market is also reacting to news that most countries in the European Union are starting to reopen. According to The Guardian, Italy will start reopening bars and restaurants in the coming week. Other businesses that will be allowed are retailers, museums, and libraries. Each of these businesses will need to enhance their safety measures to prevent infections. Still, the number of new cases in Italy is still significant. Yesterday, the country reported 744 new infections.
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EURGBP technical outlook
The EUR/GBP pair has been in consolidation since April. As a result, the amount of volatility has plummeted as evidenced by the Average True Range (ATR) indicator as shown below. What does this mean? This calmness may be a calm before the storm, which means that the pair is waiting for a catalyst that will see it breakout in either direction. The key levels to watch will be the support and resistance levels at 0.8677 and 0.8865 respectively.