EUR/GBP spikes above 0.89 on latest Brexit headlines

• UK Treasury Minister says there could be another Brexit referendum.
• Inflation in the UK surprises to the upside in August.
• Comin up: ECB's Draghi is scheduled to deliver a speech at 13 GMT.

The EUR/GBP pair gained nearly 60 pips in a matter of minutes as the GBP came under heavy selling pressure following the latest Brexit headlines. After spiking up to 5-day high at 0.8917, the pair retreated a little and was last seen trading at 0.8882, where it was up 0.12% on the day.

In an interview with Sky News today, the UK Treasury Minister, Mel Stride, said that there could be another Brexit referendum if British Prime Minister Theresa May's Chequers proposals were to get rejected in the Parliament. Meanwhile, former Brexit Secretary, David Davis, stated that he wouldn’t vote for PM May’s Brexit deal in the Parliament.

Earlier in the day, the pound sterling gathered strength against its rivals on the back of the upbeat inflation report. The data released by the UK's Office for National Statistics showed that the annual CPI in August rose 2.7% from 2.5% in July to surpass the market expectation of 2.4%. The core version of the index, which excludes volatile food and energy prices, grew 2.1% in the same period vs the analysts' estimate of 1.8%. In line with the CPI figures, the Retail Price Index advanced to 3.5% from 3.2%.

Later in the session, investors will be following ECB President Mario Draghi's comments as he delivers a scheduled speech at 13 GMT.

Technical levels to consider

The pair could face the first support at 0.8875 (100-DMA) ahead of 0.8825 (Jul. 13 low) and 0.8750 (Jun. 22 high). On the upside, resistances align at 0.8945 (50-DMA), 0.9000 (psychological level) and 0.9050 (Sep. 5 high).