- EUR/GBP drifts into the negative territory for the second consecutive session on Tuesday.
- The sterling gained traction despite fears of a no-deal Brexit and exerted some pressure.
- The bid tone surrounding the euro should attract some dip-buying and help limit losses.
The EUR/GBP cross failed to capitalize on its early uptick and has now retreated around 45 pips from daily tops, around the 0.9260 region.
The UK’s controversial Internal Market Bill passed the first hurdle in the House of Commons and added to the market worries about a no-deal Brexit. The GBP bulls, however, seemed rather unaffected, instead took cues from mostly better-than-expected UK employment details.
The ONS reported this Tuesday that the number of people claiming unemployment-related benefits stood at 73.7K, well below consensus estimates pointing to a reading of 100K. Adding to this, the previous month’s reading was also revised down to 69.9K from 94.4K reported earlier.
A pickup in demand for the British pound was seen as one of the key factors that dragged the EUR/GBP cross into the negative territory for the second consecutive session. However, the prevalent bullish sentiment surrounding the shared currency helped limit any deeper losses.
The shared currency continued benefitting from the ECB’s relatively optimistic outlook on the region’s economic recovery. The view was further reinforced by upbeat Eurozone and German ZEW Economic Sentiment Index for September, which jumped to 73.9 and 77.4, respectively.
The EUR/GBP cross was last seen hovering near the 0.9220 region. Given the overnight bounce from the 0.9200 round-figure mark, it will be prudent to wait for some strong follow-through selling before confirming that the cross might have topped out in the near-term.
Technical levels to watch
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