EUR/GBP picks up to 0.8930 after bouncing up from 0.8915 weekly lows
|- EUR/GBP dips further to =hit one-week lows near 0.8900.
- The pound appreciates on a more positive Brexit tone.
- Even if a deal is reached, the sterling will not rally much higher – Rabobank
The euro accelerated its downtrend against the pound during the European trading hours on Wednesday, to hit a fresh one-week low at 0.8915 where the pair seems to have found support to return to 0.8930 area.
Optimism about a Brexit deal underpinning the GBP
The common currency retreated for the second consecutive day against a broadly stronger pound amid hopes of an imminent trade deal with the EU. The exit of top UK Government advisor, Dominique Cummings, which was a key Brexit supporter and a more positive tone from the negotiators have boosted hopes that there is still time to avoid an unorderly exit from the EU.
On the macroeconomic front, UK consumer inflation nudged up to 0.7% year-on-year in October, beating expectations of a 0.6% increment, which might have contributed to pushing the pound higher.
EUR/GBP: seen at 0.89 in three months, 0.88 in six months – Rabobank
From a wider perspective, the Rabobank FX Analysis Team discards any sharp GBP rally in the mid-term, even if a Brexit deal is finally reached: “The disarray within the Tory party suggests that Johnson may not hold on to his position for the duration of the current electoral term. This means that even when Brexit is in the rearview mirror, UK politics are still likely to be messy. We are forecasting EUR/GBP at 0.89 in a 3-month view and 0.88 in 6 months. However, the political outlook that is emerging in the UK suggests that these predictions may prove optimistic for the pound.”
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.