EUR/GBP bearish below 0.8725, but sterling is under pressure on hard Brexit concerns

Currently, EUR/GBP is trading at 0.8682, up 1.23% on the day, having posted a daily high at 0.8698 and low at 0.8584.

EUR/GBP took off and rallied through the 0.86 handle overnight on the back of hard Brexit fears when Theresa May suggested that she is willing to go for a full Brexit instead of trying to maintain the UK's access to the common market by giving up part of the UK's sovereignty and this came after last week's resignation of EU ambassador, Ivan Rogers. The pound is vulnerable in this environment, but on the other hand, focus will very quickly turn to France and the idea of a "Frexit" and muddled ongoing talks with the EU, the pressure will continue to mount on the pound and a break below 1.2000 vs the greenback with mometum targets 1.1800 propelling the cross through Aug 2016 highs for a test of the 0.88 handle. 

Marine Le Pen last week was making her sales pitch for the French presidency and she has basically set a platform for a referendum on "Frexit"and if she doesn't find full powers over immigration controls and economic policy returned to member states by the EU by other means - considering who it seems the French population are itching for change, at a time when we are seeing the rise of populism that we witnessed last year with Brexit and Trump, the outlook for the stability in Europe is very soft and a major negative for the euro.

EUR/GBP levels

Current price is 0.8683, with resistance ahead at 0.8698 (Daily High), 0.8771 (Weekly Classic R3), 0.9118 (Annual High), 0.9118 (3 Year High) and 0.9118 (5 Year High). Next support to the downside can be found at 0.8682 (Weekly Classic R2), 0.8661 (Daily Classic R3), 0.8636 (Hourly 20 EMA), 0.8630 (Daily 100 SMA) and 0.8629 (Weekly Classic R1).

We maintain a longer term negative bias and below 0.8427, we look for a retest of the 200 day ma at .8362 recent low at 0.8304," suggested analysts at Commerzbank with a bearish outlook until a break on the 0.87 handle, adding, "Failure here will trigger another leg lower to the 0.8170 50% retracement. Only above 0.8725 will neutralise our immediate outlook."