EUR / GBP plunges to lows of more than two months and challenges the 0.8900 level

• EUR / GBP witnessed strong selling for the second day in a row on Tuesday.
• The British pound is supported by renewed hopes for a last-minute Brexit deal.
• The appearance of new sales around the euro exacerbates the downward pressure.

Buying interest around the British pound has accelerated during the European session on Tuesday and has dragged the EUR / GBP cross to two-month lows, around the round level of 0.8900.

The cross has extended losses from the previous day and has seen some continuation selling for the second day in a row on Tuesday. The relative outperformance of the British pound against the common currency could be attributed to encouraging news related to Brexit.

The UK and the EU crucial negotiations resumed in London Monday. The news indicated that the UK was open to a sensible compromise on fisheries, while EU chief Brexit negotiator Michel Barnier said they are redoubling their efforts to reach an agreement on the future EU-UK partnership.

It is worth reporting that negotiators have yet to find a compromise on key points such as the so-called level playing field, fisheries, and state aid rules. Therefore, the focus will remain on developments related to the Brexit saga, which will play a key role in influencing the British pound.

Meanwhile, the latest surge in the last hour could be attributed to the emergence of some new sales around the common currency, which is holding under pressure after the publication of the ZEW survey of the euro zone and Germany weaker than expected.

Now it will be interesting to see if the EUR / GBP cross can find any support at lower levels or continue its downward movement towards the test of the lows of early September around the 0.8865 region.