EUR/GBP steadies around 0.8900, looks to close at fresh weekly lows

• EU is reportedly ready to drop its maximalist approach in fisheries negotiations.
• ECB is said to work on a contingency plan to carry out PSPP without Bundesbank.

After spending the Asian session moving in a tight channel near 0.8930, the EUR/GBP pair lost its traction and fell to its lowest level in a week at 0.8880. Toward the end of the European session, the pair staged a technical correction and was last seen trading around 0.8900, where it was still down 0.3% on a daily basis.

GBP capitalizes on Brexit headlines

Heightened hopes of the UK and the European Union (EU) making progress on key issues in Brexit negotiations provided a boost to the GBP on Tuesday. 

Earlier in the day, Reuters reported that the EU was ready to drop its maximalist approach in fisheries negotiations in next week’s talks. “There have been hints of a possible reconciliation of approaches,” an EU source told Reuters.

On the other hand, the shared currency gathered strength after another Reuters article revealed that the European Central Bank (ECB) was working on a contingency plan to carry out its PSPP bond-buying scheme without Germany’s Bundesbank. Reflecting the upbeat performance of the EUR, which helped EUR/GBP limit its losses, the EUR/USD pair looks to close the day around 0.7% higher. 

There won’t be any significant macroeconomic data releases from the UK on Wednesday and markets will keep a close eye on ECB President Christine Lagarde’ speech at 0730 GMT.

Technical levels to watch for