- EUR/GBP fails at 0.8940 and retreats to 0.8900 area.
- Pound strength wanes amid Brexit uncertainty.
- The euro remains dangerously close to key support at 0.8860.
The euro’s bullish price action seen on the Asian and early European trading sessions has been limited below 0.8940. The pair has given away daily gains during the US session and has returned to the 0.8900 area to remain barely changed on the day.
Brexit uncertainty weighs on the pound
The common currency has ticked up for the second consecutive day on Wednesday against a slightly weaker pound. The growing uncertainty about the Brexit talks UK and EU representatives continue trying to bring positions closer in sticking issues might be undermining GBP demand.
Investors’ hopes for a post-Brexit trade deal have taken a hit on Wednesday as the European Commission president, Ursula van der Leyden, warned that a no-deal exit is still possible as the differences in fishing rights are threatening to block an agreement.
The pair, however, has been unable to capitalize the downbeat Brexit news with the euro unable, so far, to post a significant recovery to put distance from eight-month lows at 0.8860.
EUR/GBP hovering above key support at 0.8860
From a technical perspective, the EUR/GBP is trading sideways above 0.8860 support area. Below here, bears might push the pair towards 0.8800/10 (May 4, 11 highs) and 0.8740 (61.8% Fibonacci retracement of the February-March rally).
On the upside, the pair should breach 0.8960 (November 19 high) to ease bearish pressure, and extend towards 0.9000 (November 12 and 13 high) and 0.9050/65 where the November 5 and 6 highs meet the 50 and 100-day SMAs.