EUR/GBP retreats from two-month highs, returns below 0.9000
- EUR/GBP spikes up to 0.9054 before pulling back below 0.9000.
- The euro loses ground with the sterling firmer against the US dollar.
- The pair will reach levels past 0.9000 before returning to 0.8600 – Danske Bank.
The euro is giving away previous gains against the British pound, pulling back below 0.9000 and turning negative on daily charts. The pair peaked at 0.9054 during the European session and turned back later on as with the pound appreciating against the dollar.
The euro pulls back as the pound strengthens
The euro has lost steam during the US session as the GDP/USD firmed up. The dollar has remained vulnerable over the last sessions after the US GDP advanced that the economy contracted 5% in the first quarter. Beyond that, the decline on US treasury yields and market concerns that the tensions between US and China might hamper global recovery have increased bearish pressure on the greenback.
Dollar weakness has helped the pound to shrug off its own fragility. The cable has been trading on a soft tone over the last sessions, hurt by growing fears about a no-deal Brexit, market speculation about the Bank of England introducing negative interest rates and the weak UK economic outlook.
EUR/GBP will move to 0.90 before retreating to 0.86 – Danske Bank
The FX analysis team at Danske Bank expect the pound to remain bearish on Brexit tensions to pick up when the trade is reached, “We probably need to get close to the year-end deadline before a trade deal is reached. We see EUR/GBP at 0.90 over 1- 6M, followed by a move towards 0.86 on a trade deal in 12M.”