EUR/GBP: Why The World’s Most Boring Cross Could Soon Get More Interesting

Early July – UK Cabinet Meeting

PM Theresa May’s government will try to produce a united “white paper” on its vision of the post-Brexit UK-EU economic relationship. Previous attempts have failed, so expectations for next week’s meeting are relatively low.

Mid-July – Customs Union Vote

The long-delayed trade and customs bills that could call for the UK to stay in the EU customs union is set for debate a few weeks from now. The outcome of this debate should provide insight into the likelihood of a hard Brexit, as well as how the future trade arrangements between the two regions may evolve.

Of course, there will plenty more Brexit checkpoints and deadlines over the next nine months, but the concentration of high-impact events in the coming weeks may well lead to a breakout in EUR/GBP.

If the next couple of weeks suggest that the hard Brexit scenario is growing more likely, the pair could see a bullish breakout above 0.8840 resistance, opening the door for a continuation up toward 0.8900 or even the nine-month highs near 0.9000 next. Conversely, progress in the negotiations would increase the likelihood of an amicable split, potentially causing EUR/GBP to break support at 0.8700 and target the 13-month low at 0.8620.

One way or another, volatility in EUR/GBP is set to heat up along with the weather over the next couple of weeks!

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