EUR/GBP climbs to one-week tops, beyond mid-0.8900s
- EUR/GBP gains traction on Monday and recovers further from three-month lows set last week.
- Growing fears about a no-deal Brexit undermined the British pound and remained supportive.
The bearish pressure around the sterling picked up pace in the last hour and pushed the EUR/GBP cross to one-week tops, around the 0.8960 region.
The cross caught some fresh bids on the first day of a new trading week and built on last week's recovery move from the 0.8865 region, or near three-month lows. The momentum was sponsored by the emergence of some fresh selling around the British pound amid fears of a no-deal Brexit.
The UK Brexit negotiator David Frost said on Sunday that Britain was not scared of a no-deal exit at the end of the year. Separately, the Telegraph reported that UK Prime Minister Boris Johnson has set a deadline of October 15 to strike a free-trade deal with the European Union.
This comes on the back of dovish comments by the BoE MPC member Michael Saunders last week. Saunders said that the UK central bank will probably add to their already unprecedented emergency support measures in the coming months to achieve a sustained return of inflation.
On the other hand, the shared currency remained depressed on the back of the ECB’s concerns over the exchange rate level. It is worth recalling that the ECB Chief Economist Philip Lane commented last week that the euro-dollar exchange rate does matter for monetary policy.
Hence, the market focus now shifts to the latest monetary policy update by the European Central Bank on Thursday. In the meantime, the incoming Brexit-related headlines will play a key role in influencing the GBP price dynamics and produce some meaningful trading opportunities.
Technical levels to watch