EUR/GBP falls to 0.8620, between Brexit and the ECB

EUR/GBP reversed sharply and dropped toward 0.8600. In a few hours, the pair erased weekly gains and moved closer to weekly lows. It peaked during the Asian session at 0.8734, the highest since March 16 and then bounced to the downside, falling more than a hundred pips from the top, and bottomed at 0.8622. 

Currently is hovering around 0.8650, lower for the day, but unchanged for the week, on a historic day. 

Earlier today, the UK delivered a letter to Donald Tusk, EU President, formally asking for Brexit. The pound was weak in the market but after the letter was received it gained momentum and recovered ground pushing EUR/GBP to the downside. 

The pair dropped further after Reuters reported that an ECB official mentioned that the central bank was misinterpreted regarding the possible exit strategy and sent rate hike odd for December sharply lower. The report pushed the euro to the downside across the board. 

Outlook 

EUR/GBP changed dramatically the short-term tone and now it seems under pressure. Currently is trading again close to the 0.8600/10 support area; a break lower could trigger an acceleration to the downside. 

To the upside, the pair needs to regain 0.8690 in order to remove the bearish pressure. Above that level, the key resistance continues to be 0.8725: a consolidation on top could add support for a bullish extension.