- EUR/GBP remained depressed for the second consecutive session on Wednesday.
- A strong bid tone surrounding the British pound was seen exerting some pressure.
- The euro consolidated its recent strong gains and did little to influence the cross.
The EUR/GBP cross edged lower through the mid-European session and fell to over one-week lows, below mid-0.9000s in the last hour.
Following an early uptick to the 0.9085 region, the EUR/GBP cross met with some fresh supply and extended this week’s retracement slide from the 0.9140-50 supply zone. The ongoing pullback for the second consecutive session on Wednesday was sponsored by the British pound’s relative outperformance against its European counterpart.
The GBP bulls seemed rather unaffected by renewed fears of a no-deal Brexit, instead took cues from the heavily offered tone surrounding the US dollar. It is worth recalling that the latest round of negotiations ended last Thursday without any significant progress. Talks remained at a stalemate ahead of July deadline for striking a preliminary agreement.
On the other hand, the shared currency was seen consolidating its recent strong gains that came after a landmark agreement on the EU’s €750 billion pandemic recovery fund. In the absence of any major market-moving economic releases, investors now seemed to have moved on the sidelines and await a fresh catalyst before positioning for the next leg of a directional move.
It will now be interesting to see if the EUR/GBP cross is able to attract any dip-buying or bears aim back to challenge the key 0.9000 psychological mark. A convincing break through the mentioned level will indicate that the recent move up might have already run out of the steam and seen as a fresh trigger for bearish traders, setting the stage for further weakness.
Technical levels to watch
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