EUR/GBP about to break below 0.88 handle on Brexit noise?

• EUR/GBP: bears continue to target below 0.8820 on Brexit noise.
• EUR/GBP dips to hold at 0.8790?

EUR/GBP is more stable on Wednesday after Tuesday's massive drop on the back of positive progress in Brexit negotiations were reported by national newspapers in the UK, namely The Telegraph and The Times. EUR/GBP is trading at 0.8822, down -0.53% on the day, having posted a daily high at 0.8881 and low at 0.8817 and has continued to develop a case for lower below the 21 and 50-D SMA's.

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EUR/GBP has continued to drift lower on Wednesday, stalling momentarily on a headline that seems to be outdated considering the traction Britain had made with the EUR this week in regards to the divorce settlement bill. 

The stumbling block today for the pound is when it was reported that the EU Parliament wrote a letter to Barnier saying that there is not enough progress made in Brexit talks, especially around citizens rights and Ireland. The pound, that was making a base case upon the 1.34 handle before the news, dropped to as low as 1.3374 before bulls piled back on to 1.3446, as a fresh high so far. The cross has subsequently remained offered.

"The UK has made progress on two of the three separate issues, the rights of EU citizens in the UK post-Brexit and in offering more funds.  The remaining stumbling block is the Irish border," explained analysts at Brown Brothers Harriman.  "The UK proposal to allow Ireland to veto at the end of the process rather than now is not seen by the EU negotiators as a sufficient attempt to propose how it thinks a hard border will be avoided after March 2019.  Tusk, the President of the European Council, has given the UK 10 days to make headway or not move to the second phase of negotiations," the analysts added further. 

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• Irish Minister McEntee: Ireland cannot accept return to hard border

EUR/GBP levels

From a technical standpoint, the cross remains in bearish territory and is poised to fall further on a break below 0.8820. Analysts at Commerzbank argued, however, that dips lower should find initial support 0.8790/83 ahead of the major support band, namely the September low at 0.8746 and the 55-week ma at 0.8728. 

"Above 0.9034 would target 0.9093 then .9187," the analysts argued. "Below 0.8720 would target the 0.8530/78.6% retracement of the move seen this year. Near term rallies should find decent resistance at 0.8840/80 (38.2% and 50% retracements of last leg down," the analysts at Commerzbank added.