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  • EUR/GBP debilitates to the 0.9020 region on Monday.
  • The sterling picks up pace on UK-EU talks, BoE-speak.
  • Final UK Q2 GDP figures will be in the limelight later in the week.

The strong start of the week by the British pound forces EUR/GBP to recede and test fresh 3-week lows in the 0.9025/20 band on Monday.

EUR/GBP offered on GBP-buying

EUR/GBP accelerates the downside at the beginning of the week and retreats for the fourth consecutive session, this time in response to the strong buying pressure in the quid.

In fact, hopes of a positive resumption of EU-UK trade talks this week have coupled with (somewhat hawkish) comments from BoE’s MPC member Dave Ramsden, who stressed that the “Old Lady” is not thinking about negative interest rates in the (very) near-term.

The positive tone in the sterling is also helped by the moderate correction lower in the greenback, which has lifted Cable to the area of the 200-day SMA around 1.2930, or multi-day highs.

Data wise in the UK, the most salient event will be the final Q2 GDP figures (Wednesday) seconded in relevance by the Business Investment figures, Current Account results, the final UK manufacturing PMI and several BoE gauges.

On the other side of the Channel, ECB’s Christine Lagarde will hit the wires on Monday and Wednesday, while preliminary inflation figures in the euro bloc and the final PMIs will also be on top of the calendar.

What to look for around GBP

The sterling appears to have regained some poise following the sharp pullback since the start of September. While dollar dynamics are usually seen behind occasional bouts of upside momentum in the quid, the currency faces increasing risks from the domestic scenario, namely the renewed dovish stance from the BoE, downside risks to the economic outlook from the coronavirus pandemic and the omnipresent concerns around Brexit talks and the EU-UK trade negotiations despite occasional bouts of optimism.

EUR/GBP key levels

The cross is losing 0.82% at 0.9046 and a breach of 0.9016 (100-day SMA) would expose 0.8865 (monthly low Sep.3) and finally 0.8835 (200-day SMA). On the other hand, the next hurdle is located at 0.9220 (high Sep.22) seconded by 0.9291 (monthly high Sep.11) and then 0.9324 (2019 high Aug.12).