EUR / GBP fails to stay above 0.8900 remains close to the 0.8860 support level

• EUR GBP recovery attempt limited below 0.8920.
• The euro cuts losses after a two-day drop.
• In the long term, the euro is expected to remain trapped between 0.88 and 0.8900– Commerzbank.

The euro it is making a slight recovery on Tuesday, bouncing from the lows of 0.8870 to trim losses after a two-day slide. The pair, however, has failed to consolidate above 0.8900 and remains dangerously close to multi-month lows at 0.8860.

Euro recovers as market sentiment improves

The pound lost ground against a somewhat stronger euro on Tuesday, driven by a significant recovery in the EUR / USD during the European session, which has strengthened the common currency across the board. The pair, however, has lost ground during the US session although it remains positive on the daily chart.

Macroeconomic data also supported the euro on Tuesday, with the German IFO Business Climate survey posting stronger than expected figures, while German GDP showed the economy performing better than expected in the third quarter.

The strength of the euro has been limited by an overall positive pound, with GBP / USD trading at multi-month highs, supported by market optimism regarding the progress of COVID-19 vaccines and widespread confidence about an imminent Brexit deal.

EUR / GBP is trapped between 0.88 and 0.89 for the next few months – Rabobank

From a broader point of view, Rabobank’s currency analysis team believes that the pair will trade sideways for the next few months: “(The) GBP still has a lot of hurdles to overcome before investor sentiment can. raise a couple more points and UK politics have the potential to sour the mood. We expect the EUR / GBP to trade mainly in the 0.88 / 0.89 region in the coming months. “

Technical levels