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  • EUR/GBP pulls lower to test support at 0.9045 area.
  • The pound remains moderately bid on Brexit deal hopes.
  • EUR/GBP keeps trapped within a clear downtrend channel.

The euro has been moving without a clear direction against the British pound on Tuesday, before pulling lower during the US session hitting day lows at 0.9045.

Brexit deal hopes offer support to the GBP

Sterling has remained moderately bid against the euro over the last two days. News about the extension of the Brexit negotiations has boosted hopes of a deal that would avoid an unfriendly divorce. EU representative, Michel Barnier has resumed talks in London on Tuesday in an attempt to clinch a deal, less than 10 weeks ahead of the deadline to leave the Union.

The impulse from the upbeat Brexit news on the pound, however, has been muted, with the investors increasingly wary about the challenges ahead for UK economy, with coronavirus infections growing to record levels and the Bank of England expected to introduce negative interest rates next year.

EUR/GBP trapped within a downtrend channel

From a technical point of view, the euro remains trading within a negative channel from mid-September highs. On the downside, immediate support lies at 0.9040 (October 26 low) and below there, 0.9005 (October 14 low) and trendline support, now around 0.8955.

On the upside, a bullish reaction would find resistance at 0.9100 (trendline resistance). A clear breach of that level might add bullish traction, to test 0.9150/60 (October highs) and 0.9220 (September 22 high).

Technical levels to watch