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EUR/GBP is under the spotlight today as the EU and U.K. representatives hold emergency talks over the latest Brexit drama.

Oh, and then there’s that small thing about an ECB policy announcement. Which way will EUR/GBP go?

Before we talk about the pair, take a look at the major headlines that moved the major currencies in the past few hours:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • France’s industrial production at 6:45 am GMT
  • Italy’s industrial production at 8:00 am GMT
  • ECB’s monetary policy announcement at 11:45 am GMT
  • ECB’s presser at 12:30 pm GMT
  • U.S. PPI numbers at 12:30 pm GMT

What to Watch: EUR/GBP

EUR/GBP 1-hour Forex Chart
EUR/GBP 1-hour Forex Chart

Today’s European session promises to be a volatile one as traders deal with the European Central Bank (ECB)’s policy announcement AND more Brexit drama.

Forex Gump believes that, while the ECB won’t make major policy changes today, comments on the euro’s strength and the possibility of even more stimulus could still move the markets.

Meanwhile, U.K. Cabinet Office Minister Michael Gove will meet EU official Maros Sefcovic in London to clarify the possibility of the U.K. breaking an international agreement over a bill published yesterday.

We don’t expect any hard resolutions today though we could see more headlines about Brussels taking legal action. Yipes.

EUR/GBP is currently having trouble trading above .9125, a level that had successfully served as resistance back in late June and mid-July.

If the ECB gang hint at further stimulus, or if the possibility of a concrete Brexit deal before Johnson’s September 15 deadline becomes less likely, then EUR/GBP could finally break above the .9125 resistance to retest the .9200 levels.

On the other hand, productive talks between the EU and U.K. reps could drag EUR/GBP to the bottom band of its daily average volatility (blue area). Same deal if Lagarde and her team choose to focus on the EU dealing with the second wave of coronavirus infections without hinting of more stimulus down the road.

What do you think? Will .9125 hold as resistance for another day?