EUR/GBP: capped in hard rally to key resistance at 0.8738, 0.8774 next?

Currently, EUR/GBP is trading at 0.8716, up 0.38% on the day, having posted a daily high at 0.8739 and low at 0.8678.

Sterling has taken a hit in early Asia and the pace picked up as we approached the Tokyo open. The crosses were led by GBP/AUD although EUR/GBP triggered stops and smashed through the 0.87 handle and up to test a key resistance level where it has stalled.

• GBP/USD and crosses beaten up as Brexit looms 
• GBP/JPY bears break below 138 handle, playing catch up with Sterling's weakness

While markets are fully aware that the UK is leaving the EU, it appears there was still some long sterling business to be covered ahead of the event cashing in in sterling;s recent strength.

 UK PM May signs Article 50 letter

The UK PM Theresa May has already signed the letter, she did so overnight.  The British ambassador, Sir Tim Barrow, is due to deliver it to EU's Donald Tusk around 12GMT. Tusk holds a press conference announcing that the negotiations will formally begin in the process of separating Britain from the European Union. 

EUR/GBP levels

Analysts at Commerzbank noted that the Initial resistance lies at 0.8738 and 0.8774 (downtrends). They suspect that this will cap for now. "Above 0.8800, there is scope to tackle the 0.8852 January high. We look for the downside currently to be limited by the 200-day ma at .8571."