EUR/GBP dives to multi-week lows, below mid-0.9000s

The buying interest around the British pound picked up pace during the early European session and pushed the EUR/GBP cross to near three-week lows, just below mid-0.9000s.

The cross extended last week's retracement slide from the 0.9215-20 region and witnessed some heavy selling for the fourth consecutive session on the first day of a new trading week. The British pound's relative outperformance against its European counterpart could be solely attributed to reports that both the UK and the EU made key concessions to avoid a no-deal Brexit.

Reports indicated that the two sides remain optimistic that some kind of a deal will be struck before the very important EU summit in mid-October. This comes ahead of the ninth and final round of scheduled Brexit negotiations, starting on Tuesday, which, in turn, was seen as a key factor that prompted a broad-based short-covering move around the British pound.

The downward momentum took along some short-term trading stops near the 0.9100 round-figure mark, which further aggravated the bearish pressure and contributed to the pair's steep decline. Given that oscillators on the daily chart have just started drifting into the negative territory, the EUR/GBP cross remains vulnerable to weaken further amid absent relevant market moving economic releases.

Technical levels to watch