- EUR/GBP regained traction on Monday and reversed a major part of Friday’s retracement slide.
- The recent spike in new COVID-19 cases undermined the sterling and provided a modest boost.
- A subdued USD demand benefitted the euro and remained supportive of the intraday move up.
The EUR/GBP cross held on to its modest intraday gains through the first half of the European session and was last seen trading near daily tops, around the 0.8570-75 region.
The cross managed to regain positive traction on the first day of a new week and reversed a major part of Friday's retracement slide from the vicinity of the 0.8600 mark. The worsening COVID-19 situation was seen as a key factor behind the British pound's relative underperformance and provided a modest lift to the EUR/GBP cross.
According to the official figures released on Sunday, another 33K+ people in Britain tested positive for COVID-19. The country also reported 61 COVID-related deaths, fueling worries about the fast-spreading Delta variant of the coronavirus. This, in turn, acted as a headwind for the sterling and extended support to the EUR/GBP cross.
On the other hand, the shared currency benefitted from a subdued US dollar price action. This was seen as another factor that contributed to the EUR/GBP pair's intraday bounce of around 20 pips from the 0.8560 region. However, a bank holiday in the UK held bulls from placing aggressive bets and might keep a lid on any further gains for the cross.
Hence, it will be prudent to wait for some strong follow-through buying, beyond the 0.8600 mark before positioning for any further appreciating move. Market participants now look forward to the release of prelim German consumer inflation figures, which might influence the EUR/GBP cross and produce some short-term trading opportunities.