- EUR/GBP in a consolidation phase.
- Brexit headline supported the sterling.
- Euro didn’t react much to the prelim Eurozone GDP report.
EUR/GBP couldn’t move firmly in any direction and vacillated between mild gains and losses in the early European session.
The cross bounced back this week from near one-month lows and traded in a narrow range below mid-0.9000s in the last two trading sessions.
The British pound is showing strength and caps the upside for the EUR/GBP. The statement from the UK chief negotiator David Frost on Thursday that the Brexit agreement can be reached by September, ahead of the next round of negotiations in the coming week, spurred hopes that all parties are committed to reaching a deal. The positive vibes on the Brexit front helped the sterling to outperform the euro.
Also, the common currency didn’t gain much traction from the second reading of the preliminary Eurozone GDP report. The Eurozone economy contracted by 12.1 Percent q-o-q during the second quarter this year.
The absence of buying in EUR/GBP indicates the recent bounce from 0.897 might have now run out of steam and suggests bears might take control of the action. But, before taking any bearish bets, it is wise to watch for a sustained break below 0.9000.
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