- The sterling got a strong lift on Monday after negotiations agreed to extend Brexit talks.
- EU’s Barnier reiterated that two key conditions remain unresolved in Brexit negotiations.
- A pickup in the shared currency further contributed to limit the downside for EUR/GBP.
The EUR/GBP cross witnessed some selling during the early European session and refreshed daily lows, around the 0.9065-60 region in the last hour.
The cross failed to capitalize on its attempted intraday recovery move, instead met with some fresh supply near the 0.9115-20 region amid reviving hopes for a last-minute Brexit deal. Investors turned optimistic that the UK and the UE will secure a free trade agreement after negotiators agreed to extend the post-Brexit trade talks beyond Sunday’s deadline.
The buying interest around the British pound picked up pace in the last hour despite not so optimistic comments by the EU’s chief Brexit negotiator, Michel Barnier, saying that two conditions remain unresolved in talks. Barnier added that the negotiators will give every chance to reach a deal, which seemed to be the only factor that impressed the GBP bulls.
However, the fact that the UK and the EU have repeatedly failed to narrow their differences on key sticking points, investors are still not clear if a no-deal scenario can be avoided. This, along with a modest uptick in the shared currency, extended some support to the EUR/GBP cross and helped limit any further losses, at least for the time being.
Nevertheless, the EUR/GBP cross has now eroded a major part of last week’s strong move up and a sustained weakness below 200-hour SMA could pave the way for additional weakness. Developments surrounding the Brexit saga will play a dominant role in influencing the EUR/GBP cross and provide some trading impetus amid absent relevant market moving economic releases.
Technical levels to watch
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