EUR/GBP holds the 0.90 handle on Prime Minister May's win of 200-177 no confidence vote victory
- EUR/GBP has been pressured higher by a handful of pips from 0.8975 to 0.9026 on the official result of PM May's no-confidence vote where she won a strong vote in favour of her staying in No.10 Downing Street as the UK's Primine Minister to lead the UK out of the EU.
- The result came with 200 Conservative lawmakers showing confidence in her and only 177 that did not.
- EUR/GBP is also pressured by French and Italian politics, ending NY at around 0.90 the figure.
The cross has been pressured on Wednesday, sliding from a high of 0.9070 to a low of 0.8969 leading up to the result of the no-confidence vote. However, the pound is not out of the woods yet with many obstacles and uncertainties that remain before the March 29 Brexit date. The Prime Minister now needs to concentrate on her next greatest challenge where many of the members of both her party and the rest of parliament oppose her Brexit withdrawal agreement which will make it almost impossible to get parliament's backing. The options markets continue to price in the uncertainties which likely makes it hard for the pound to sustain the upside for the meantime amid increasing risks of a no-deal Brexit, the possibility of a second referendum and a leadership challenge in the whole government that could ultimately see Labour win an election.
The market can now focus on ECB
In the immediate future, attention will switch over to the ECB where we markets will look out for anything from Draghi that strikes a cautious tone on growth.
Politics on mainland Europe will also be a focus with the reports that Italy could propose a 2 percent deficit target which has already pushed BTP yields lower, narrowing Italian-German spreads to their tightest levels this month, supporting the euro to regain the 10- and 21-DMAs vs the greenback and likely helping buoy EUR/GBP which has made a correction from the lows to recently trade back towards the pivot where it sat before the results of PM May's no-confidence vote.
EUR/GBP buckled ahead of the 0.9101 August high earlier this week, resuing the downside which penetrated the 100-hr SMA until a previous line of support and resistance at 0.8969. On a break above 0.91, bulls can target the top of the 2016-2018 channel at 0.9172, according to analysts at Commerzbank. "Risks are on the topside, and the market stays bid near term while above the 0.8941 support. Below 0.8941 lies the 200-day ma at 0.8837."