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EURGBP: bullish correction possible

FX:EURGBP   Euro / British Pound
The cross is driven mostly by Brexit headlines these days. The pound looks quite steady despite the controversial signals from the UK. The UK currency advances this month on hopes that the deadline for London to leave the EU will be extended. There are also talks about a second referendum, which gives a lift to sterling as well.

But the uncertainty on this front remains elevated. Next Monday, May will present her Plan B to the House of Commons, and there is a high risk that the new plan will be rejected. By the way, the leader of the main opposition Labour party, Jeremy Corbyn, confirmed he will boycott talks until the prime-minister rules out the option of a no-deal Brexit.

EURGBP reached the end-November low at 0.8829 on Thursday and was then rejected from this level. Considering the oversold conditions in the short-term charts and the continuing Brexit turmoil, sterling could come under pressure in the days to come and thus send the cross higher from the current level. In this scenario, the pair may regain the 0.8880 handle and target the 0.8950 region in the medium term.

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