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
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
