- EUR/GBP regained some positive traction for the third straight session on Thursday.
- Brexit anxieties undermined the British pound and remained supportive of the uptick.
- A modest pullback in the shared currency capped any meaningful upside for the cross.
The EUR/GBP cross traded with a mild positive bias through the early European session and was last seen hovering near the top end of its daily trading range, around the 0.8915-20 region.
Following the previous day’s intraday pullback of around 40 pips, the cross managed to regain some positive traction on Thursday but lacked any strong follow-through buying. The British pound’s relative underperformance against its European counterpart could be solely attributed to Brexit anxieties.
British finance minister, Rishi Sunak said on Thursday that negotiations are still ongoing and that he remains hopeful that a deal can be reached. In the absence of a significant breakthrough on key sticking points (level playing field, fisheries and state-aid rules), the comments did little to impress the GBP bulls.
Also, it is worth recalling that the European Commission president, Ursula van der Leyden warned on Wednesday that a Brexit deal is far from certain as the disagreement over access to Britain’s fishing waters continues to block progress. Moreover, British Prime Minister Boris Johnson reiterated that the UK’s position on fisheries hasn’t changed.
Johnson further added that they will not ask for additional time to negotiate the trade deal with the European Union. With very little time left before the Brexit transition periods end on December 31, the deadlock tempered hopes for a last-minute Brexit deal and turned out to be a key factor that held the GBP bulls from placing fresh bets.
Meanwhile, the emergence of some fresh selling around the shared currency kept a lid on any meaningful upside for the EUR/GBP cross. This, in turn, makes it prudent to wait for some strong follow-through buying before confirming that the cross has bottomed out in the near-term and positioning for any further recovery move.