- Poor Eurozone economic Data
- Calls for Negative Interest Rate
- Riots in the U.S
A strengthened EUR, in response to a weakening U.S dollar, is promising to send the EUR/GBP pair higher after a recent sell-off. Growing talk of potential negative interest rates in the U.K has left the British Pound on the defensive, conversely fueling a buying spree on the EUR/GBP pair.
EUR Strength- Pound Weakness
EUR remains resilient even as weak economic data in the Eurozone continues to arouse concerns. Eurozone CPI data undershooting expectation at 0.1% versus expected 0.3%, at four years low, raises serious doubt as to whether the economy is recovering following the COVID-19 pandemic. Similarly, Germany’s retail sales report continues to rattle the market on coming in at 5.3%.
Amidst the weak economic data, EUR/GBP pair has recovered from one-week lows of £0.8987 and showing signs of edging higher on Pound weakness.
Pound weakness continues to support an upswing in the EUR/GBP pair as traders remain concerned over the health of the U.K economy. The economy has struggled under the weight of the coronavirus, triggering calls for negative interest rates to revitalize the struggling economy.
Looking ahead, the market awaits the release of the Eurozone’s Markit Manufacturing PMI on Monday that should weigh in on EUR strength, conversely, the EUR/GBP pair. The report coming below the expected 39.5 could trigger a sell-off of the single currency conversely resulting in the pair edging lower.
The release of the U.K’s Marking Manufacturing PMI data could also weigh in on the Pound strength, which remains on the defensive. With the economy showing signs of a struggle, it is highly unlikely that the Pound will rise.
The focus in the forex market will also be on the unrest in the U.S fuelled by the brutal murder of George Floyd. Riots across the country have already triggered weakness in the U.S Dollar, leading to the strengthening of the EUR against other pairs.