EUR/GBP pares Wednesday's losses and returns to 0

EUR/GBP pares Wednesday’s losses and returns to 0.9070 area

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  • EUR/GBP bounces back from 0.9015 and returns to 0.9070 area.
  • The pound loses ground as Brexit deal hopes weaken.
  • EUR/GBP might rush towards 0.93 if Brexit talks fail – Rabobank.

The euro appreciated about 0.5% against the pound sterling on Thursday, bouncing at 0.9015 lows to pare Wednesday’s losses and return to 0.9070 area.

The pound suffers as Brexit hopes weaken

The has given away with the investors reassessing the likelihood of significant achievements in the Brexit talks. The differences in the issues like fisheries and fair competition and dispute resolution are still significant, which suggests that if an agreement is reached, it will be of limited scope.

Additionally, the increase of COVID-19 cases in the UK, with 19,000 new infections and 138 deaths reported on Wednesday has forced the Government to tighten restrictions. London has moved to “high” alert level and indoor meetings of people from different households have been forbidden, which has added pressure to the GBP.

EUR/GBP might rush towards 0.93 if Brexit talks fail – Rabobank

Despite today’s progress, the Rabobank FX analysis team warns about a sharp EUR/GBP rally if the trade deal does not crystalize: “we expect EUR/GBP to struggle to break below 0.89 in the early months of next year. On the event that no trade deal is signed by the EU and the UK, we would expect a spike to the 0.93 region.”

Technical levels to watch

Credit: FX Street

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