The Euro to Pound pair is struggling for direction after a recent plunge to one-month lows. The Euro is holding steady against the British pound at the backdrop of weak economic releases that continue to raise serious concerns about the health of the European economy.
A rally to the 0.8734 level appears to have attracted short-sellers as the pair has retracted to the 0.871 level fueling suggestion of a weak bullish formation after a recent rally upwards. The pair started the week on a sound footing as it tried to bottom out from one-week lows. However, a wave of weak economic data from the European Union continues to threaten the bounce back.
A confirmation that European new car sales plunged by 51% in March has once again reaffirmed the effects of the coronavirus on the trading block economy. The data indicate that all the 27 EU markets contracted in March as people were forced to stay at home as part of measures designed to curb a further spread of the virus in the block.
Amidst the weak economic data EURO, traders remain optimistic as coronavirus rates appear to have peaked and now on a downward spiral. A number of countries in the economic block have already started to ease lockdown restrictions a move expected to have a positive impact on the block’s ailing economy.
A confirmation that Italy and Spain have gained hold of infection rates after a month of strict lockdown should continue to offer support to the Euro against the British pound. The British Pound, on the other hand, remains on edge against the Euro at the backdrop of rising Brexit concerns.
Downing Street refuting calls for an extension to the December 31, deadline is the latest tailwind pilling pressure on the pound at the backdrop of coronavirus fallout. A spokesperson at Number 10 has confirmed they don’t intend to ask for a Brexit extension.
The Pound also remains under pressure against the Euro amidst concerns about the health of Prime Minister, Boris Johnson, who is recovering from coronavirus infection. A lack of a clear head at Downing Street leaves GBP investors jittery.