Last week, we had a fundamental triangle pattern that helped Sterling’s recovery. The “Johnson, Merkel, Macron triangle ” and rising hopes for a better Brexit deal helped GBP to gain ground against all major currencies.

The G7 leaders’ summit in France over the weekend might offer something of a lead for the week ahead.

According to Reuters, British Prime Minister Boris Johnson is expected to tell European Council head Donald Tusk that the UK will only pay 9 billion pounds ($11 billion) instead of the 39 billion pounds ($47.88 billion) liability agreed by former Prime Minister Theresa May under a no-deal Brexit, Sky News reported early on Sunday. Full Text: Johnson to tell EU’s Tusk UK won’t pay £39 billion under no-deal Brexit: Sky News

It is obvious that a less painful Brexit would help both the UK and EU economies.

When we look at the subject in terms of EURGBP currency pair, any positive development in the Brexit process is likely to help Sterling which is very cheap on a Real Currency Strength basis.

Technically:

As seen on the H4 chart, the pair dropped 60 pips after completing Head&Shoulders pattern. EURGBP entered a correction process that was supported by the U.S-China trade war and tested the broken neckline.

The neckline at 0.90900 worked well as resistance and the pair headed South. Apart from the fundamentals, we predict the price is likely to continue its bearish move.

The breakout of 0.90300 would accelerate the bearish trend. If the pair breaks below 0.90300, it is likely to test 0.90000 and 0.89750 levels.

Closing above 0.91000 would change the near term direction of the pair. In this case, Bulls will target 0.91200 and 0.91420. We have two bearish harmonic patterns that can be used as selling opportunities.

Conclusion: We keep our short positions and plan to add at the breakout of 0.90300 support.