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EUR / GBP turns lower and extends losses below 0.9000

  • EUR / GBP resumes its downtrend and breaks below 0.9000.
  • The pound appreciates due to a climate of risk appetite in the market.
  • GBP backed by hopes of a Brexit deal.

The euro has resumed its downtrend, and the British pound appreciated against its major peers on Tuesday. The pair has broken below the 0.9000 support area, reaching its lowest levels in almost two months, at 0.8965.

The euro loses ground against a stronger pound

The common currency has turned lower after Monday’s docile recovery attempt failed at the 0.9025 area. GBP / USD, which is recovering over 1% so far, fueled by a strong appetite for risk, is pushing the British pound higher across the board.

In the absence of significant macroeconomic data in the UK, the market remains unfazed by the lack of relevant progress in the Brexit negotiations, as hopes for a last-minute deal to prevent a hostile exit from the Union apparently remain intact.

Beyond that, the impact of the month-long close announced by British Prime Minister Boris Johnson over the weekend, which weighed on the sterling crosses on Monday, appears to have faded on Tuesday, with the focus shifting to United States presidential elections.

EUR / GBP tests trend line support at 0.8960

From a technical perspective, the pair remains trapped within the downtrend channel since mid-September and approaching trendline support from the lows of late April, now around 0.8960. Below here, the next support level would be at 0.8915 (61.8% Fibonacci retracement of the May-September uptrend) and 0.8875 (September 3 low).

On the upside, the pair should break above 0.9025 (Nov 2 high) to ease downward pressure and extend towards 0.9100 (trend line resistance from Sept 11 high). Once up here, the pair would break out of the downtrend channel to target 0.9250 / 60 (Oct 1, 7 and 20 highs).

Credits: Forex Street

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