EUR/GBP: downside bias favoured on political risks in fragile EMU

Currently, EUR/GBP is trading at 0.8440, up 0.74% on the day, having posted a daily high at 0.8449 and low at 0.8305.

EUR/GBP is testing critical downside levels with the 200 dma recently broken at 0.8363, grounds are fragile to the downside and the pound continues to hold on to the 1.27 handle vs the greenback in a dollar positive environment.

GBP/USD clings to 1.2700

The EU is underfire with politics coming to the fore again, and markets are concerned how fragile the banking sector is and how delicate the EMU is looking now with Renzi resigning, Brexit, the Dutch populist movement and forthcoming elections in France all on the horizon.

The ECB will be the main highlight this week - "This is a live meeting in the sense that policy announcements are expected to be forthcoming," explained analysts at BBH, adding," What is at stake is not interest rates - The deposit rate will likely remain at minus 40 bp - Instead, decisions are needed about its asset purchases."

ECB to extend QE purchases by six months - Danske Bank

EUR/GBP levels

Current price is 0.8440, with resistance ahead at 0.8443 (Weekly Classic PP), 0.8449 (Daily High), 0.8451 (Daily Classic R1), 0.8455 (Hourly 100 SMA) and 0.8484 (Hourly 200 SMA). Next support to the downside can be found at 0.8414 (Daily Classic PP), 0.8390 (Hourly 20 EMA), 0.8381 (Daily Open), 0.8378 (Monthly Low) and 0.8378 (Weekly Low).