- EUR/GBP edged higher for the fourth consecutive session on Tuesday.
- Brexit uncertainties undermined the sterling and remained supportive.
- The euro struggled to gain any traction and capped gains for the cross.
The EUR/GBP cross traded with a mild positive bias through the early European session, with bulls making a fresh attempt to build on the momentum beyond the 0.9100 mark.
The cross built on the previous day’s goodish intraday bounce of around 75 pips from levels just below 100-day SMA and gained some follow-through traction on Tuesday. The uptick marked the fourth consecutive day of the positive move and was exclusively sponsored by the British pound’s relative underperformance against its European counterpart.
The sterling started losing traction on Monday after the UK Brexit Negotiator, Michel Frost, said that there is no point on resuming talks. Adding to this, the UK’s Brexit minister, Michale Gove affirmed that the UK is ready for an “Australian-style” exit from the Union, resurfacing concerns about a hard Brexit at the end of the transition period.
Meanwhile, the EU’s Brexit negotiator, Michel Barnier, confirming that the EU remained available to intensify Brexit negotiations. Given that trade talks between the UK and the EU had stalled amid disagreements over fishing access and competition issues, conflicting remarks added to Brexit-related uncertainties and took its toll on the GBP.
On the other hand, the shared currency was seen oscillating in a narrow trading band and failed to provide any additional boost to the EUR/GBP cross. This, in turn, was seen as the only factor capping gains for the cross, making it prudent to wait for some follow-through buying before positioning for any further near-term appreciating move.
There isn’t any major market-moving economic data due for release on Tuesday, either from the Eurozone or the UK. Hence, the incoming Brexit-related headlines will continue to play a key role in influencing the GBP price dynamics and produce some short-term trading opportunities around the EUR/GBP cross.
Technical levels to watch
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