EUR/GBP pushed higher for a second straight day on Tuesday, supported by heightened no deal Brexit risk which dragged on sterling. Any upside, however, could be capped by ECB concerns over Euro strength
In early trade the EUR/GBP pair rallied to a fresh two week high. Bulls are looking to continue driving the pair higher beyond the key psychological level of 90.00,
Growing fears of a hard no trade deal Brexit on 31st December is keeping the Pound under pressure. And is one of the key driving forces pushing EUR/GBP northwards.
British Prime Minister Boris Johnson has set a mid-October deadline by which a deal must be agreed, or he threatens to walk away from talks. Prior to this, UK Chief Brexit negotiator David Frost said that Britain was not afraid of a no deal Brexit.
The EU’s chief negotiator, Michel Barnier accused the British government of wanting the best of both worlds in trade talks. These concerning Brexit headlines come as the 8th round of trade talks are due to kick off in London and as bets of a no deal Brexit rise.
Meanwhile, the Euro has failed to really take advantage of the weaker Pound, after hints from the ECB that Euro strength could be a problem. As a result, EUR/GBP bulls are likely to hold steady ahead of Thursday’s ECB meeting.
As GBP is almost exclusively driving EUR/GBP, attention will be firmly on post trade talk headlines. Eurozone GDP and unemployment data could garner some attention before then.