EUR/GBP: a turn of sentiment, or back to 0.90?

Currently, EUR/GBP is trading at 0.8932, down -0.47% on the day, having posted a daily high at 0.8979 and low at 0.8906.

EUR/GBP was on the backfoot while the pound bounced at the start of the week. The weekend lacked further news around the deteriorating political climate in the UK and progress of Brexit and the threat of the 0.90 handle has been reversed, for the time being. However, analysts at Scotiabank are more bullish on the pound, who think a lot of bad news has already been factored into the GBP at current levels.

Pound looking quite cheap - Scotiabank

Meanwhile, Catalonia's standoff with Madrid continues, as noted by analysts at Brown Brothers Harriman.  "It is if the collective breath is being taken.  Will Catalonian leaders declare independence?  If they do not,  have the popular passions and expectations been so aroused as to render the situation controllable?   The brinkmanship tactics require going to the brink, and the brink is at hand.  Investors seem to expect Catalonia to blink. Spanish bonds and stocks performed well on Monday, and the sovereign credit default swap slipped." 

EUR/GBP levels

Analysts at Commerzbank explained that directly below the market lies a major band of support which extends down from the 0.8748 14th July low to ).8720.  "This contains the 200-day ma, the 55-week ma, and the 2015-2017 uptrend. Below .8700 would target the 0.8530/78.6% retracement of the move seen this year." However, a break back towards the psychological level opens 0.9027 and then aAbove0 .9145 would retarget the 0.9308 recent high.