- EUR/GBP snaps two-day uptrend, bounces off intraday low.
- UK reports highest virus-led deaths since March, Brexit jitters prevail.
- Germany’s Bundesbank President Jens Weidmann backed the ECB tapering chatters.
- Lack of major data/events highlight can weigh on the quote amid cautious sentiment.
EUR/GBP struggles to extend the two-day uptrend, remains pressured around 0.8595, heading into Thursday’s European session.
The pair jumped to the fresh high since late July the previous day amid increasing odds of the European Central Bank’s (ECB) bond purchase reduction.
After firmer inflation and favorable Unemployment Rate, Germany’s Bundesbank President Jens Weidmann backed the ECB tapering chatters, preceded by Vice President Luis de Guindos. The hawkish expectations reject German Retail Sales that slumped in July.
On the other hand, UK PMIs remain pressured as the nation battles the virus resurgence and multiple strains of the covid. After initially hearing about the Delta variant, the World Health Organization (WHO) cites cases of ‘Mu’, as another variant of the coronavirus, in the UK. The UK’s virus-led deaths rose past 200 for the first time since March the previous day. “Coronavirus cases in the UK have on Wednesday risen by 35,693 with a further 207 deaths recorded in the last 24 hours – this is the first time daily deaths have risen above 200 since March,” the UK Mirror said.
It should be noted that Reuters relied on the monthly footfall data in the UK malls compiled by Springboard to convey the much-awaited big return of shoppers. “The number of shoppers hitting Britain’s high streets, shopping centers and retail parks continued to improve in August, with the gap on the same month in 2019 reducing to -18.6% from -24.2% in July,” said the news.
Talking about Brexit, the BBC said, “New post-Brexit rules for moving goods from Northern Ireland to the rest of the UK have been delayed.” On the contrary, the UK Express’ criticism of the EU’s restrictions for the UK from re-entering the Lugano Agreement highlights the Brexit woes.
Against this backdrop, S&P 500 Futures and the US 10-year Treasury yields remain pressured, mostly unchanged, while the US Dollar Index (DXY) keeps late Wednesday’s bounce off monthly low.
Moving on, a lack of major data/events, except for the Eurozone Producer Price Index for July, may restrict the EUR/GBP moves and highlight Brexit, covid as the key catalysts.
Technical analysis
Despite the recent pullback, EUR/GBP keeps an upside break of 100-DMA level of 0.8585, which in turn directs the quote towards the monthly resistance line near 0.8615. Alternatively, 100-DMA breakdown, won’t invite bears until the quote breaks 0.8580 level and confirm one-month-old rising wedge bearish chart pattern.