- EUR / GBP regains positive traction on Thursday and ends a two-day losing streak.
- Renewed fears of a no-deal Brexit weigh on the GBP and support the pair’s upward move.
- The selling tone around the common currency could limit any uncontrolled movement in the EUR / GBP.
The crossing EUR/GBP maintained its buying tone at the start of the European session on Thursday, rising above the 0.8950 level to new daily highs. At the time of writing, the cross remains above 0.8950 after having peaked at 0.8963.
The cross has managed to attract some buying at lower levels on Thursday and, for now, appears to have halted its recent decline in rejection from the key psychological level of 0.9000. The rally has helped the EUR / GBP cross reverse the previous day’s losses to weekly lows, around the 0.8915 region and break two consecutive days of losing streak.
The news that European Union leaders will demand that the European Commission publish plans for a no-deal Brexit They have tempered expectations that the UK and the EU could reach a Brexit deal early next week. This, in turn, has weighed on the British pound and helped the EUR / GBP cross gain some positive traction.
On the other hand, the common currency is being pressured by a modest short-hedging move in the US dollar. This, along with the expectations of greater monetary easing by the European Central Bank it has weighed even more on the euro, which should contain any uncontrolled movements for the EUR / GBP cross, at least for now.
Investors could also refrain from opening aggressive directional positions and may prefer to stay on the sidelines and wait for further updates on Brexit. Reportedly, EU negotiators are to brief envoys from the bloc’s 27 member states on the latest trade talks with Britain on Friday, which justifies some caution for investors.
In the absence of major economic releases, be it from the UK or the euro zone, the EUR / GBP cross remains at the mercy of Brexit-related news. Any subsequent bullish movement is likely to face stiff resistance near the round 0.9000 level. Should it rise above that level it should be seen as a new trigger for the bulls.
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