EUR/GBP spikes to 0.9100 mark, fresh session tops
- EUR/GBP built on the previous day’s goodish rebound from the 0.9000 mark.
- The shared currency remained well supported by the EU recovery fund deal.
- The emergence of some selling around the sterling provided an additional lift.
The EUR/GBP cross refreshed daily tops during the early European session, with bulls now looking to extend the momentum further beyond the 0.9100 round-figure mark.
The cross built on the previous day's goodish intraday bounce from the key 0.9000 psychological mark, or over one-week lows and gained some strong follow-through traction for the second consecutive session on Wednesday. The positive move lacked any obvious fundamental catalyst and could be solely attributed to the emergence of some fresh selling around the British pound.
The sterling failed to capitalize on its recent gains and was being pressured by renewed concerns about a no-deal Brexit. Reports indicated that the ministers now believe that Britain and the EU will fail to sign a post-Brexit trade deal. This comes ahead of the UK Prime Minister Boris Johnson's July deadline for an outline agreement passes and took its toll on the pound.
On the other hand, the shared currency remained well supported by the fact that the European Union leaders on Tuesday finally reached an agreement on an unprecedented stimulus package worth €750 billion – aimed at aiding the region’s worst-hit economies. The pandemic recovery fund comprised of €390 billion in grants and €360 billion in loans.
Meanwhile, the EUR/GBP cross has now recovered its weekly losses. In the absence of any major market-moving economic releases, either from the UK or the Eurozone, some follow-through buying should pave the way for a move back towards three-week tops, around the 0.9135-40 region set on Monday.
Market participants now look forward to a scheduled speech by ECB President Christine Lagarde, which might influence the common currency and produce some meaningful trading opportunities.
Technical levels to watch