EUR/GBP remains depressed, finds some support near 0.8900 mark

• EUR/GBP failed to capitalize on the overnight gains and edged lower on Friday.
• The GBP bulls seemed rather unaffected by renewed no-deal Brexit concerns.
• Dovish comments by BoE’s Saunders helped limit any further losses, for now.

A modest pickup in demand for the British pound pushed the EUR/GBP cross to fresh daily lows, around the 0.8900 mark during the early European session.

Following an early uptick to the 0.8930 region, the cross met with some fresh supply and eroded a part of the previous day's goodish rebound of around 70 pips from near three-month lows. The shared currency's relative underperformance against its British counterpart could be tied to the ECB Chief Economist Philip Lane's comments on Tuesday, saying that the exchange rate does matter for monetary policy.

On the other hand, the sterling seemed to have largely shrugged off growing concerns over a no-deal Brexit. It is worth recalling that senior officials in the UK Prime Minister Boris Johnson's office see only 30-40% chances that there will be a Brexit trade agreement with the European Union due to an impasse over state aid rules. Additionally, there have been reports that the Brexit talks are close to collapse.

Meanwhile, the latest dovish remarks by the BoE MPC member Michael Saunders kept a lid on any strong gains for the pound. During a scheduled speech on Friday Saunders said that the unemployment is likely to rise significantly in coming quarters and the risk remains tilted in favour of slower economic recovery over the next year or two. This, in turn, assisted the EUR/GBP cross to find some support near the 0.8900 mark.

Hence it will be prudent to wait for some strong follow-through selling before traders again start positioning for an extension of the recent/well-established bearish trend.

Technical levels to watch