EUR/GBP plummets to fresh weekly lows, sub-0.9000 levels

• EUR/GBP witnessed aggressive selling on Wednesday and retreated further from multi-week tops.
• Reviving hopes for a Brexit trade deal boosted the British pound and exerted some heavy pressure.
• Dovish ECB expectations held the euro bulls on the sidelines and did little to lend any support.

The EUR/GBP cross dived to fresh weekly lows during the mid-European session, with bears now looking to extend the intraday downfall further below the key 0.9000 psychological mark.

The cross witnessed some aggressive selling on Wednesday and has now retreated over 140 pips from 0.9140 region, or multi-week tops touched at the beginning of this week. The British pound’s strong outperformance against its European counterpart could be solely attributed to reviving hopes for a last-minute Brexit deal.

The UK Cabinet minister, Michael Gove said on Wednesday that there can be scope for compromise on fishing rights – a key sticking point in post-Brexit trade talks. Bolstering the optimism were comments from German Chancellor Angela Merkel, who hinted that the EU will be willing to compromise on the level-playing field.

The developments come ahead of a key summit between UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen at 19:00 GMT later this Wednesday. This, in turn, forced investors to unwind their bearish GBP bets and was seen as one of the key factors exerting some heavy pressure on the EUR/GBP cross.

On the other hand, the shared currency was supported by the prevalent selling bias surrounding the US dollar. However, expectations for further easing by the ECB kept the euro bulls on the defensive and did little to lend any support to the EUR/GBP cross.

With the GBP price dynamics turning out to be an exclusive driver of the EUR/GBP pair’s intraday fall, investors will keep a close eye on the incoming Brexit-related headlines. Any further indications that a post-Brexit trade deal could still be struck this week should pave the way for further depreciating move for the cross.

Technical levels to watch