EUR/GBP recovers from the dovish ECB meeting and hits 3-day highs

• Pound turns volatile ahead of critical Brexit week. 
• EUR/GBP erases weekly losses, back above the 0.8600 zone. 

The EUR/GBP pair accelerated to the upside during the US session on the back of a decline of the pound across the board, that took place during the London fix. After hitting a 3-day high at 0.8634, retreated to the 0.8600 area and as of writing trades back at daily highs. 

Price action remains volatile around Pound’s crosses amid Brexit uncertainty and also possibly due to the London fix. Next week crucial votes area expected at the Parliament with no clear results. The latest headline regarding Brexit mentioned that Barnier, the chief EU negotiator, told ambassadors the EU is willing to give to the UK a unilateral exit from the single customs union territory while preserving other elements of the backstop.

With today’s rally, the euro erased the losses that followed the ECB meeting on Thursday. The central bank took a dovish tilt announcing new TLTROs and analysts move further away the expectations of the beginning of the normalization in monetary policy.

The weaker pound offset the negative impact of ECB announcements on the euro. Now EUR/GBP is about to end the week with modest gains.