EUR/GBP rebounds to 0.8930 as pound losses momentum

• Pound losses momentum even as equity markets continue to recover ground.
• Concerns weigh on GBP as BoE Bailey warns banks to plan for a Brexit without a deal.  

The EUR/GBP pair is rising on Wednesday after falling during the previous two days. It bottomed at 0.8865 on Tuesday, the lowest since May 15 and as of writing, it is hovering around 0.8920. A few minutes ago, climbed to 0.8931, the highest in two days.

Data released on Wednesday showed Eurozone final readings for the Markit PMI service sector slightly above initial estimates, but still showing dramatic contraction in economic activity. Also, in the UK, the PMI was revised higher to 29.

In the UK, Bank of England Governor Bailey warned banks to step up plans for a Brexit without a trade deal. Later, UK PM Johnson spokesman mentioned that despite the outcome of Brexit talks, the UK will leave the EU single market. The impasse on negotiations will likely continue to limit gains in GBP.

Regarding the euro, market participants focus on two things at the moment: Thursday’s European Central Bank meeting and negotiations around the recovery stimulus package from the European Commission.

Technical levels

On the upside, the immediate resistance for EUR/GBP is seen at 0.8930. A consolidation above 0.8930 would clear the way to more gains, targeting 0.8960. On the flip side, under 0.8880, the bearish pressure will likely rise, exposing 0.8850.