EURGBP rallies on weaker pound; daily cloud twist also attracts
The cross accelerated from 2 ½ week low at 0.8771, posted earlier today and broke above 0.88 handle after highly-anticipated speech of opposition leader Jeremy Corbyn today.
Corbyn explicitly supported customs union with EU after Brexit, despite Labour party also being split over Brexit case.
Sterling was deflated after Corbyn’s speech as opposition’s view of Brexit further collides with strategy of British PM May.
The EURGBP cross bounced from dangerous zone (the weakness earlier today cracked pivotal support at 0.8775 (Fibo 61.8% of 0.8686/0.8919 upleg), reducing immediate downside risk.
Technical studies are bearish overall (daily MA’s are in firm bearish setup / 14-d momentum heads south, deeply in negative territory), but reversal of slow stochastic from oversold zone signals correction, with daily cloud twisting today (0.8854) and attracting rallies.
Initial pivotal barrier lies at 0.8830 zone (Fibo 38.2% of 0.8919/0.8771 bear-leg / 55SMA), guarding (100SMA / daily cloud top (0.8853) break of which would generate stronger bullish signal.
However, daily cloud is widening after twist and may produce stronger pressure which would keep the downside vulnerable, while daily cloud limits recovery attempts.
Res: 0.8815; 0.8830; 0.8854; 0.8870
Sup: 0.8800; 0.8771; 0.8732; 0.8716