- Easing of U.K Lockdown Restrictions
- U.K Stimulus Plans
- Euro Resurgence
EUR/GBP is struggling for direction at 1-week lows as traders react to weakness on the British Pound as well as EUR after a strong rally against the dollar. A recent sell-off, of the pair, has come on the British Pound rallying to three months highs against the dollar.
Sterling Bounce Back
After touching two and a half months highs, EUR/GBP has pulled lower in response to a wide range of developments in the Eurozone, as well as the U.K. The pair is currently trading near a critical support level at $0.8868 as traders await a new string of catalysts to fuel price action.
The British Pound has so far remained resilient, thus the sell-off in the EUR/GBP pair. Talk that Prime Minister, Boris Johnson, is poised to ease lockdown restrictions post COVID-19 has helped fuel strength in the sterling resulting in a slide in the pair.
The pair has also tumbled on reports the U.K is preparing a wave of investment plans in a bid to shore up an economy battered by the COVID-19 pandemic. Optimism about economic recovery as well as growing hopes that the U.K will reach an agreement with the EU as part of BREXIT negotiations has helped strengthen the Pound against the Euro.
However, the sterling’s gains against the Euro could be short-lived as the Euro is also on its longest winning streak against a basket of other currencies. Euro strength has benefited from a wave of stimulus plans by the ECB designed to shore up the Eurozone economy. Similarly, the opening up of the Eurozone economy in the aftermath of the COVID-19 pandemic has also helped shore up Euro sentiments in the market.
Looking ahead, the release of Germany’s and France’s Balance of Trade reports should weigh in on Euro strength conversely EUR/GBP direction of trade. Traders also await the Euro area GDP Growth Rate report.