- Pound at 2 Weeks Highs
- Brexit Negotiations Boost
- BOE Downplays Negative Interest Rate
EUR/GBP came under pressure in Tuesday trading session as the British Pound rallied to two-week highs amidst weakness in the U.S dollar. Strength in the British Pound also came at the backdrop of reports that the European Union is contemplating shifting its stance in fisheries as part of ongoing BREXIT negotiations.
Sell-off in the EUR/GBP pair persisted in the Wednesday trading session as the pair dropped below the £0.8900 level clocking sessions lows of £0.8809. The drop came as the British Pound continued to strengthen across the board.
EUR Weakness stems from a string of negative economic releases that continue to rattle traders in the forex market. Just days after German GDP data disappointed signaling a contraction of 2.2% in the first quarter, consumer confidence is the latest tailwind to take a toll on EUR sentiments in the market. While German GFK consumer confidence did improve to -18.9 from -23.9, it is still at all-time lows alluding to weakness in the German economy.
Traders are looking forward to the ECB President Christine Lagarde’s speech that could help shed more light on the status of the EU economy. Publication of the EU Financial Stability Review is another report that could sway the EUR/GBP direction of trade.
The GBP/USD, on the other hand, continued its bounce back from two months lows, rallying to two weeks highs in early Wednesday trading session. The rally came on Chief Economist at Bank of England Andy Haldane, reiterating they are not considering taking UK’s interest rate to the negative territory.
Sterling Pound sentiments have also improved as the cloud over calls for the resignation of Boris Johnson aide eased away. Traders’ focus is increasingly shifting towards EU-Brexit negotiation as the economy bounces back from the COVID-19 fallout.
The reopening of the U.Ks economy, as well as the U.S economy, is one of the developments that could influence the GBP/USD direction of trade. Reopening is poised to trigger an economic recovery in the U.S and Britain waiting to see which economy will recover fastest.