EUR/GBP rallies back closer to 0.9100 mark, Brexit/ECB in focus

• EUR/GBP gained strong positive traction on Thursday amid renewed selling around the GBP.
• The lack of progress in the post-Brexit trade talks dampened prospects for a last-minute deal.
• Investors look forward to the highly anticipated ECB policy decision for some trading impetus.

The intraday selling around the British pound picked up pace during the early European session and pushed the EUR/GBP cross to two-day tops, around the 0.9085 region.

The incoming headlines dampened prospects for a last-minute post-Brexit trade deal and dragged the British pound lower during the first half of the trading action on Thursday. This, in turn, was seen as one of the key factors that assisted the EUR/GBP cross to gain some strong positive traction and build on the overnight bounce from the 0.9085-80 support zone.

It is worth reporting that a key summit between the UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen ended with no apparent progress. Officials cited that both sides remain far apart on key issues like fisheries and level playing field. Negotiators now have time until the end of the week to hammer out a compromise deal.

The bearish pressure surrounding the sterling remained unabated following the release of upbeat UK manufacturing and industrial production figures. Adding to this, the UK monthly GDP print came in line with consensus estimates, albeit did little to provide any respite to the GBP bulls or hinder the strong intraday positive move for the EUR/GBP cross.

On the other hand, the shared currency was supported by a subdued US dollar price action, though lacked any strong bullish conviction ahead of the highly anticipated European Central Bank decision. The announcement, along with the ECB President Christine Lagarde’s comments at the post-meeting press conference, will be looked upon for a fresh trading impetus.

Apart from this, developments surrounding Brexit saga will continue to play a dominant role in influencing the GBP price dynamics. This will further contribute to infuse some volatility around the EUR/GBP cross and produce some meaningful trading opportunities on Thursday.

Technical levels to watch