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  • EUR/GBP steady above 0.9040 and capped below 0.9100.
  • The pound remains on the defensive despite upbeat Brexit news.
  • Downbeat German Busines Climate Index adds pressure on the EUR.

The euro has been moving back and forth against the pound, trading without a clear bias on Monday. The pair remains steady on the upper range of 0.9000, with upside attempts limited below 0.9100 and risk aversion pushing both currencies down against the USD.

Hopes of a Brexit deal ease GBP’s weakness

News reports about the extension of the Brexit negotiations has boosted hopes of a trade deal between the UK and the EU and offered support to the sterling earlier today. The pair lost ground during the London trading session to hit session lows at 0.9040.

According to newspaper headlines, EU representative Michael Barnier will stay in London until Wednesday in an attempt to seal a trade agreement with the UK to avoid an unfriendly exit from the Union.

On the macroeconomic front, the sharper than expected deterioration of the German Business Climate, with the IFO Index retreating in October for the first time since the start of the pandemic, has increased concerns about the economic impact of the coronavirus, adding negative pressure on the euro.

The common currency, however, has found support at 0.9040 and pared daily losses to return to 0.9080 area and remain practically unchanged on the day. From a wider point of view, the pair is consolidating gains after having appreciated nearly 1% late last week although it seems unable to breach the 0.9100 level.

Technical levels to watch