- EUR/GBP witnessed an intraday turnaround amid a sudden pickup in demand for the sterling.
- The GBP bulls seemed rather unaffected by not so optimistic incoming Brexit-related headlines.
The EUR/GBP cross retreated around 80-85 pips from the early European session swing highs and refreshed daily lows, near the 0.9070 region in the last hour.
The cross built on the previous day’s goodish bounce from the 0.9045 region and gained some follow-through traction through the first half of the trading action on Tuesday. The momentum assisted the EUR/GBP cross to fill the weekly bearish gap, albeit quickly ran out of the steam near mid-0.9100s.
The sharp intraday pullback was exclusively sponsored by the emergence of some fresh buying around the British pound. Despite not so optimistic developments, investors remained optimistic about the possibility for a last-minute Brexit deal before the end of the transition period on December 31.
It is worth reporting that the UK and the EU have repeatedly failed to narrow their differences on key issues. Moreover, the EU’s chief Brexit negotiator, Michel Barnier reiterated on Monday that there has been limited progress on two sticking points – enforcement mechanisms and State Aid.
The GBP bulls even shrugged off the latest comments by the UK PM spokesman, saying that no-deal Brexit is still the most likely outcome. The UK wants a free trade agreement with the EU but not at any cost, the spokesman added further, though did little to lend any support to the EUR/GBP cross.
On the other hand, the shared currency continued with its struggle to build on the post-ECB positive move and witnessed some selling. This, along with some technical selling below the 0.9100 round-figure mark, further seemed to have aggravated the selling pressure around the EUR/GBP cross.
It, however, remains to be seen if the pullback marks the end of the recent strong move up or the EUR/GBP cross is able to attract some buying at lower levels. Hence, it will be prudent to wait for some follow-through selling before positioning for any further depreciating move.
Technical levels to watch
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