- EUR/GBP fades the previous day’s rebound from weekly low.
- Mixed sentiment ahead of the key data challenges the cross-currency pair.
- The fourth delay in Brexit checks adds to the bearish bias.
- Headlines from Russia, China should also be watched for fresh impulses.
EUR/GBP takes offers to refresh intraday low near 0.8415 heading into the London open on Friday.
The cross-currency pair portrayed a volatile session the previous day while refreshing the weekly low before closing with mild gains. However, pre-data caution and mixed sentiment relating to the Russia-Ukraine crisis, as well as China’s covid woes, seem to have recalled the EUR/GBP bears of late.
Although private companies from the bloc are bracing for the Russian energy payment in the ruble, the bloc’s policymakers remain on their way to exerting more pressure on Moscow via an oil embargo. The same raises doubts about the economic performance of the old continent. On Thursday, European Central Bank (ECB) Economic Bulletin mentioned that Russia’s aggression in Ukraine is causing enormous suffering.
On the other hand, the UK pushed back the Brexit border checks for the fourth time after the historical move, which in turn seems to have helped the GBP a bit during a lackluster session. “Boris Johnson’s government has scrapped the introduction of planned post-Brexit inspections on food coming into the UK from the EU, cabinet minister Jacob Rees-Mogg has announced,” per Reuters.
However, the bears need to remain cautious as the Eurozone and Germany are both up for releasing Q1 2022 GDP figures. Also likely to challenge the EUR/GBP bears are comparatively more hawkish ECB policymakers than their BOE counterparts.
That being said, the Eurozone Gross Domestic Product (GDP) is likely to improve to 5.0% YoY versus 4.6% prior, per the seasonally adjusted Q1 2022 figures. For Germany, the YoY GDP Figures may rise to 3.6% versus 1.8% prior.
Additionally, geopolitical and covid-linked headlines from Russia and China will also act as the catalysts and need the attention of the EUR/GBP pair traders.
Technical analysis
Despite bouncing off the 100-DMA, around 0.8375, EUR/GBP failed to cross a downward sloping resistance line from December 2021, close to 0.8465, which in turn redirects bears towards the stated DMA support. However, any further downside will make the pair vulnerable to drop towards the 0.8300 round figure.