- EUR/GBP resumes its downtrend and breaks below 0.9000.
- The pound appreciates on the back of a risk-on market mood.
- GBP underpinned by Brexit deal hopes.
The euro has resumed its downtrend, with the sterling appreciating against its main peers on Tuesday. The pair has broken below the 0.9000 support area, reaching its lowest levels in nearly two months, at 0.8965.
The euro loses ground against a stronger pound
The common currency has turned lower after the tame recovery attempt staged on Monday failed at 0.9025 area. The GBP/USD, which is rallying beyond 1% so far today, buoyed by a strong appetite for risk, is pushing the sterling higher across the board.
In absence of significant macroeconomic data in the UK, the market remains unfazed by the lack of relevant progress in the Brexit negotiations, as hopes of a last-minute deal to avoid an unfriendly exit from the Union apparently remain intact.
Beyond that, the impact of the one-month lockdown announced by the British Prime Minister Boris Johnson over the weekend, which weighed on GBP crosses on Monday, seems to have faded on Tuesday, with the focus shifted towards the US Presidential elections.
EUR/GBP testing trendline support at 0.8960
From a technical perspective, the pair remains trapped within the downtrend channel since mid-September and approaching trendline support from late-April lows, now around 0.8960. Below here, next support level would be at 0.8915 (61.8% Fibonacci retracement of the May-September uptrend) and 0.8875 (September 3 low).
On the upside, the pair should break above 0.9025 (November 2 high) to ease bearish pressure and extend towards 0.9100 (trendline resistance from September 11 high). Once above here, the pair would break the downward trend channel to aim towards 0.9250/60 (October 1, 7 and 20 highs).
Technical levels to watch
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