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  • EUR/GBP witnessed heavy selling for the second consecutive session on Tuesday.
  • The British pound was supported by renewed hopes for a last-minute Brexit deal.
  • The emergence of fresh selling around the euro aggravated the bearish pressure.

The buying interest around the British pound picked up pace in the last hour and dragged the EUR/GBP cross to over two-month lows, around the 0.8900 round-figure mark.

The cross added to the previous day’s losses and witnessed some follow-through selling for the second consecutive session on Tuesday. The British pound’s relative outperformance against its European counterpart could be attributed to the overnight encouraging Brexit-related headlines.

Britain and the EU resumed crucial negotiations in London on Monday. Reports indicated that the UK was open to a sensible compromise on fishing, while the EU’s chief Brexit negotiator Michel Barnier said they are redoubling their efforts to reach an agreement on the future EU-UK partnership.

It is worth reporting that negotiators are yet to find a compromise on key sticking points – the so-called level-playing field, fisheries and state-aid rules. Hence, the focus will remain on developments surrounding the Brexit saga, which will play a key role in influencing the sterling.

Meanwhile, the latest leg of a sudden fall over the past hour or so could further be attributed to the emergence of some fresh selling around the shared currency, which remained depressed following the release of weaker-than-expected German/Eurozone ZEW Survey.

It will now be interesting to see if the EUR/GBP cross is able to find any support at lower levels or continues with its downward trajectory further towards testing early September swing lows, around the 0.8865 region.

Technical levels to watch