EUR/GBP crawls higher and approaches 0.9100

• EUR/GBP bounces up from 0.9020 to reach session highs at 0.9085.
• The pound loses ground with all eyes on the Brexit talks.
• The euro remains trapped in a downtrend channel since early September.

The euro has bounced up strongly from 0.9020 lows to appreciate nearly 0.5% on Tuesday, reaching session highs at 0.9085 against the pound. The common currency has taken advantage of the broad-based pound weakness to put an end to a four-day losing streak.

The pound dives with all eyes on the Brexit negotiations

The lack of progress on the Brexit negotiations with the EU has undermined last week's moderate optimism about an agreement before the October 15-16 summit and has pushed the pound lower across the board.  

With the Brexit on the limelight, UK macroeconomic data has been practically unnoticed. The unexpected increase of the ILO unemployment rate in the three months to August, released earlier today, has had a muted reaction from the pound.

In Europe, the German ZEW survey has reflected a sharp decline in the economic sentiment in October. The spread of coronavirus infections and the uncertainty regarding the Brexit and the outcome of the US presidential elections have been pointed out as the main reasons behind the deterioration of the Eurozone’s economic prospects.

EUR/GBP remains biased lower

From a wider perspective, the EUR/GBP remains trading within the downward trending channel from September 11 high. On the upside, the pair should break the trendline resistance, now at 0.9115 area, to neutralize the negative trend and confirm above 0.9130 (Oct 9 high) before aiming towards 0.9160 (Oct 7 high).

On the downside, the pair seems to have an important support area at 0.9020/35 (100-day SMA and Sept 28 low). Below here, next support levels are 0.8875 (Sept 3 low) and 0.8820 (May 15 low).

Technical levels to watch