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EUR/GBP Signal - UK Triggers Article 50 - 30 Mar 2017

Signal details
Entry Price: 
0.8653
Close Price: 
0.8561
Direction: 
Low
Expiry Time: 
20:00 GMT
Result: 
ITM
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The UK government yesterday formally initiated Article 50, triggering the exit talks with the EU. The move comes close to a year after the UK voted to leave the EU during the June 2016 EU-UK referendum. The markets are currently awaiting a response from the EU.

The British pound was volatile on the news event yesterday but the EURGBP saw the biggest action as price initially rallied to session highs of 0.8735 before giving up most of the gains to touch session lows of 0.8624. By the closing session, EURGBP settled on a bearish note at 0.8655. The British pound did not weaken on the data as the currency remained quite resilient.

Despite the British currency weathering the impact of the now realistic exit from the EU, many experts warn of further volatility to come. The letter submitted by the British Prime Minster Theresa May to the European Council president, Donald Tusk outlined Britain's views on the desire for the UK to remain a "close friend and ally of the EU."

The British government is hoping that while it exits the single market and also puts an end to freedom of movement, a new deal is expected to be chalked out amid concerns that the UK will be presented with a huge settlement bill with the EU, including pensions and budget commitments. The EU is expected to weigh the consequence and give a response back to the UK, which will take a few weeks time. However, going by the rhetoric, the EU response is expected to be harsh, not giving into any concessions to the UK.

EURGBP has continued to extend the declines from yesterday and the near term downside pressure is likely to persist. Therefore, today's binary options trading signal is to purchase daily PUT options in EURGBP to ride the downtrend. On the 1-hour chart, EURGBP has been posting steady declines so expect a near term rebound.

Look for EURGBP to retrace towards 0.8653, where daily PUT options are recommended for a 20:00 GMT expiry time. Selling EURGBP near 0.8653 will signal further downside in prices as the Brexit theme continues amid lack of any clear catalysts as far as the EU and the UK are concerned on the economic calendar.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.