- The Pound Sterling advances strongly against the Euro.
- Strong EUR/GBP rally is supported by economic recovery and favorable data.
- Brexit gaining steam once again.
The EUR/GBP currency exchange rate was off to a strong rally on Monday, which prevailed for the better part of Tuesday morning, and this was largely courtesy of positive or favorable economic data. Economic reopening in the UK sent the economy to recovery after a tough few months at the height of the coronavirus pandemic, which led to a huge economic downturn. Massive job cuts and businesses shutting down raised concerns about the economy’s ability to get back on its feet.
The latest economic data highlights some good news. For example, the British Retail Consortium-KPMG monitor revealed that UK sales rallied by 3.4% in June 2020 compared to the 1.6% drop reported in June 2019. The impressive retail sales performance observed in the UK in June is courtesy of the lifted restrictions that had been put in place to prevent the coronavirus spread.
The EUR/GBP was bullish on Tuesday morning with the price expected to trade long above 0.9027. Key price targets were set at 0.9047, 0.9084, 0.9109 and 0.9171.
The measures significantly suppressed retail sales, but the eased restrictions have supported strong recovery, and this has also reflected in the Pound Sterling’s performance. The GBP demonstrated a strong rally against the Euro this week, indicating scales have tipped in favor of the Pound.
Will the GBP rally prevail with the Brexit issue gaining traction once again?
British lawmakers have renewed their commitment to the Brexit issue, and they even announced plans to ensure that they strike a deal before the end of the year. They plan to move forward with Brexit regardless of the type of deal they will receive from the European Union. The announcement might be a move to demonstrate their seriousness about Brexit to the EU.
However, it might have a significant impact on GBP’s performance. The concern among investors is that the Brexit situation will bring more uncertainty to the market, thus disrupting its current recovery while curtailing its potential gains. However, the GBP is expected to receive more performance boost from upcoming data on Tuesday, including Claimant Count Change and Manufacturing production data.