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  • EUR/GBP regained positive traction on Tuesday and edged back closer to the 0.9100 mark.
  • Persistent Brexit-related uncertainties undermined the sterling and remained supportive.
  • The shared currency held on to its modest gains after upbeat ZEW Economic Sentiment Index.

The EUR/GBP cross edged higher through the first half of the European trading session and was last seen hovering near daily tops, around the 0.9080 region.

Following the previous day’s sharp pullback of over 100 pips from the 0.9140 region, or the highest level since October 20, the cross managed to catch some fresh bids on Tuesday. The British pound’s relative underperformance against its European counterpart could be solely attributed to persistent uncertainty over the outcome of post-Brexit trade talks.

The UK Prime Minister Boris Johnson will travel to Brussels in a last-ditch effort to strike a post-Brexit trade deal with the European Commission President Ursula von der Leyen. The EU’s chief Brexit negotiator, Michel Barnier said on Monday that significant differences remain open on the three key outstanding issues – level playing field, governance and fisheries.

Apart from a softer tone surrounding the sterling, the EUR/GBP cross was further supported by the emergence of some buying around the shared currency. Despite expectations for additional monetary easing by the ECB, the euro gained some traction and stood tall following the release of better-than-expected German/Eurozone ZEW Economic Sentiment Index for November.

It will now be interesting to see if bulls can capitalize on the positive move or the EUR/GBP cross meets with some fresh supply at higher levels. In the absence of any market-moving economic releases from the UK, developments surrounding the Brexit saga will continue to influence the GBP price dynamics and assist traders to grab some short-term opportunities.

Technical levels to watch