EUR / GBP limited just below the 0.9150 level

• EUR / GBP regains traction on Tuesday and recovers further from yesterday’s lows.
• Lingering uncertainties around Brexit and London’s tighter lockdown take their toll on the British pound.
• The euro benefits from the USD’s sustained selling bias and continues to support the pair’s rally.

The British pound has seen some selling at the start of the European session on Tuesday and has pushed the EUR / GBP cross to two-day highs, around the 0.9150 region. At time of writing, the pair is pulling back slightly from the highs but remains positive on the day around the 0.9125-30 region.

The cross has built on the previous day’s solid bounce from the 0.9045 area and gained strong continuation traction during the first half of Tuesday’s trading action. News of lack of progress in Brexit talks has dampened investor optimism that an agreement can still be reached.

On Monday, the EU’s main Brexit negotiator, Michel Barnier, reiterated that there has been limited progress on enforcement mechanisms and disagreement on state aid. This, coupled with the imposition of a tighter lockdown on London, took its toll on the British pound and provided a good boost to the EUR / GBP cross.

On the other hand, common currency remains underpinned by softer tone around US dollar, which remains weak near the two-and-a-half-year lows amid hopes for additional fiscal stimulus in the United States. This, in turn, has been seen as another factor driving the EUR / GBP cross higher for the second day in a row on Tuesday.

With the latest move up, the cross has now closed the weekly bearish opening gap and appears poised to challenge the resistance of a multi-month downtrend line, around the 0.9180 region. Some subsequent purchases beyond the 0.9200 level will be seen as a new trigger for the bulls and will pave the way for additional gains.

EUR / GBP technical levels