EUR/GBP bounces off lows, still in the red around 0.9000 mark
- EUR/GBP met with some fresh supply on Tuesday, snapping two days of winning streak.
- A strong pickup in the demand for the sterling was seen exerting some heavy pressure.
- A mildly positive tone surrounding the shared currency helped limit any further losses.
The strong bid tone surrounding the British pound dragged the EUR/GBP cross back below the key 0.9000 psychological mark, or fresh session lows in the last hour.
The cross came under some fresh selling pressure on Tuesday and snapped two consecutive days of the winning streak, stalling its recent strong recovery move from five-week lows. The downfall was exclusively sponsored by a strong pickup in demand for the British pound.
Despite the lack of progress in Brexit talks, the GBP bulls were back in control and even shrugged off weaker US data that showed that the retail sector is struggling. The Confederation of British Industry’s distributive trade survey fell to -6% in August from the +4% reading in July.
Apart from this, possibilities of some intraday stops being triggered below the 0.9000 mark further aggravated the bearish pressure. However, a mildly bid tone surrounding the shared currency helped limit any further losses, at least for the time being.
The euro found some support after the final version of the German GDP showed that the economy contracted by 9.7% during the second quarter of 2020 as against 10.1% estimated earlier. Adding to this, the German Ifo Business Climate Index rose to 92.6 in August from the 90.5 previous.
The EUR/GBP cross quickly recovered around 20 pips from an intraday low level of 0.8982, albeit seemed struggling to capitalize on the bounce further beyond the 0.9000 mark. This makes it prudent to wait for some strong follow-through buying before positioning for any meaningful positive move.
Technical levels to watch