EUR/GBP reaches fresh eight-week highs at 0.8970

• EUR/GBP crawls above 08960 for the first time since late March.
• The euro appreciates on hopes of an EU recovery fund.
• BoE's Bailey hints to negative interest rates and the pound slides.

EUR/GBP rebound from 0.8900 lows on Tuesday has extended on Wednesday’s US trading session, with the pair reaching prices beyond 0.8960 for the first time in nearly two months. The euro bounced up at 0.8920 earlier today, to reach 0.8970 highs so far.

The euro buoyed on the back of the EU fund proposal

The euro is moderately positive on Wednesday, favoured by market hopes that the common fund proposal agreed by France and Germany will help coronavirus-hit members to shore up their economies. The 500 million euro fund proposal, although smaller than expected, has helped to ease concerns about the differences among EU countries, boosting hopes about the possibility of a fiscal union.

On the other side, the pound sterling remains vulnerable following the comments by Bank of England Governor, Andrew Bailey, who let the doors open to the adoption of negative interest rates to tackle the effects of the coronavirus shutdown.

EUR/GBP: heading towardss 0.9060 – Commerzbank

According to Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, the EUR/GBP uptrend still has room to go, "We view the market as having recently based and our target is 0.9060. The base should remain valid while the cross continues to trade above the April low at 0.8671.”