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EUR/GBP Rally Slows Amid Expectations That EU Leaders Will Agree On Economic Stimulus

  • The Euro gains on favorable market data
  • European Union leaders to discuss deeper fiscal integration and economic stimulus.
  • UK GDP data supports strong GBP performance.

The EUR/GBP has had an interesting start this week as the exchange rate maintained a strong rally on Monday and Tuesday. The bullish performance was courtesy of favorable market data in the UK, but the exchange rate turned weak bearish on Wednesday morning as the Euro enjoyed some gains. Traders favored the Euro following reports that EU leaders are discussing additional fiscal integration and the possibility for more economic stimulus packages.

Time                             :         07-15-2020

Pivot                            :         0.9071

Technical View              :         Long Above    0.9091

Target                          :         0.9111, 0.9122, 0.9153, 0.9191

Technical View              :         Short Below    0.9051

Target                           :         0.9031, 0.9014, 0.8987, 0.8946

The EUR/GBP’s strong rally on Monday and Tuesday was courtesy of the Pound Sterling’s impressive performance as investors favored the currency after releasing positive market data. The UK’s Office for National Statistics revealed that the country’s GDP grew by 1.8% in May after the record 20.8% decline in the previous month. This allowed the Pound to jump on the recovery trend.

Meanwhile, positive news from the EU cut short the GBP’s gains on Wednesday morning, thus the weak bullish performance. The Euro’s gains were largely fueled by positive investor response to the likelihood that EU heads will approve more economic stimulus and more measures to shield the economy from the coronavirus-induced decline.

Eurostat, the EU’s statistics office, also revealed that the Eurozone achieved strong industrial production in May after production slowdown in previous months due to the pandemic. The manufacturing segment saw a 12.4% increase in productivity in May compared to the 18.2% decline in April.

The data indicate that the Eurozone economy is recovering at a good pace after being disrupted by the coronavirus’s negative impact, which saw many industries temporarily closing down. Meanwhile, investors remain cautiously optimistic, especially since the Brexit talks have gotten back onto the spotlight, with a deal expected before the year. Previous Brexit headlines have negatively affected the Pound’s performance.


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