EURGBP give up early gains and turns lower in a quiet session as investors shift their attention to the new round of Brexit negotiations between the UK and EU. This round of negotiations main theme would be on the access of the UK financial sector to the EU market after the Brexit.
United Kingdom is in a transition period until the end of the year, and both parties are looking for a new relationship after the divorce. British pound will be under pressure if we don’t have a trade agreement. In case of a deal, the pound might attract some buying interest as the uncertainty would be eliminated.
The UK and the EU economies both got a major hit during the coronavirus outbreak. Eurozone GDP contracted by -12.1% in line with expectations. The UK Gross Domestic Product shrank by 20.4% in the second quarter of the year, following a contraction of 2.2% in the first quarter.
Euro was gaining momentum versus the British pound the last two weeks and managed to return above the 50-day moving average, thus giving the bulls the upper hand.
EURGBP Technical Analysis
EURGBP is testing the strong support at the 50-day moving average today. Bulls are in control above that level, and higher levels might be on the cards. On the other hand, bears looking for a break below 0.9030 to initiate new short positions.
Intraday support for the pair stands at 0.9032 the daily low. A break below might test 0.9002 the low from August 14. More bids would emerge at 0.8970 the low from August 11.
On the flip side, initial resistance for GBPUSD is at 0.9062 the daily top. The high from July would provide the next resistance area at 0.9081. Above that level, the next supply zone would be met at 0.9131.
All in all, the momentum is positive for the pair, and higher levels are feasible as long the pair holds above the 50-day moving average support.
EURGBP Price Daily Chart