- U.K Negative Interest Talk
- Brexit Uncertainty
- Economic Data Watch
The EUR/GBP pair rallied from one-week lows, Monday morning, as the British Pound came under pressure amidst talk of negative interest rates in the U.K. Brexit talk’s uncertainty is another headwind that continues to pile pressure on the Sterling.
The Euro has remained resilient in recent weeks, strengthening against other major currencies on growing confidence over the handling of the COVID-19 pandemic. The passing of a massive €1.35 trillion stimulus package has all but continued to strengthen the single currency against the Pound.
Time : 07-06-2020
Pivot : 0.9024
Technical View : Long Above 0.9044
Targets : 0.9055 – 0.9064 – 0.9071
Comments : Weak Bearish
Last Price : 0.9039
The British Pound, on the other hand, has been on the defensive amidst growing concerns about economic recovery following COVID-19 disruptions. Its strength would be tested further in the week ahead, following reports that the Bank of England has opened discussions with Commercial lenders hinting at the possibility of negative interest rates.
The BOE has reportedly warned a number of lenders of the potential costs that could come into being with a shift to negative interest rate policy. The talk has only gone to prompt weakness in the Sterling, sending the EUR/GBP higher.
In addition, Brexit uncertainty should continue to weigh heavily on Pound sentiments in the market. Germany Chancellor Angela Merkel has already warned that the EU needs to prepare for a no-deal as part of the ongoing Brexit talks.
Prime Minister, Boris Johnson, has already indicated he is open to an Australian trade relationship with the EU, something that continues to complicate the ongoing talks. In the week ahead, the markets await any signs of a compromise between the EU and the U.K.
Likewise, the focus will be on a plethora of economic releases set to paint a clear picture of the U.K and EU economy. On Monday, the focus will be on the release of the Euro Area Retail sales. Traders also await the release of U.K PMI for June.