- EUR/GBP attacks intraday top, tests Monday’s pullback moves.
- EU signals easing stance on Brexit, UK-Germany discuss British travelers’ entry to Europe.
- German inflation may back ECB’s Holzmann over inflation outlook but Lagarde’s comments will be the key.
EUR/GBP picks up bids to refresh intraday high around 0.8595, up 0.05%, during Tuesday’s Asian session. The cross-currency pair snapped a two-day uptrend the previous day before bouncing off 0.8566.
Mixed concerns surrounding the UK seem to help the EUR/GBP buyers of late. Among them, Britain’s coronavirus (COVID-19) conditions could be a major catalyst. As per the latest official figures for Monday, UK reported the highest daily infection since January 30, adding 22,868 cases to the total of 4,755,078. Even so, the UK remains hopeful of removing major activity restrictions in July, per the newly appointed Health Minister Sajid Javid.
Elsewhere, the European Union (EU) recently showed readiness to ease sausage war as European Commission Vice President Maroš Šefčovič said, per the BBC, that he is "confident" a solution can be found in the next 48 hours over a possible ban on chilled meat products from GB being sold in NI. It’s worth noting that Jersey’s extension of French fishing rights’ transition also avoids the immediate Brexit tussle.
At home, ECB policymaker Robert Holzmann signaled that there’s no room to increase rates given weak inflation, adding that the PEPP will end when the coronavirus emergency is over. Additionally, Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Monday that he'd like to discuss the conditions under which the emergency ends from a policy point of view, as reported by Reuters.
Given the mixed signals and pre-data caution amid a light calendar day, EUR/GBP may remain sidelined ahead of Germany’s Harmonized Index of Consumer Prices (HICP) and a speech from ECB President Christine Lagarde. While downbeat expectations for German inflation data could back fears of no monetary policy adjustments and weigh on the quote, ECB’s Lagarde may keep the buyers hopeful with her economic optimism.
Technical analysis
Unless declining below three-week-old horizontal support around 0.8565-60, EUR/GBP bulls keep targeting the monthly resistance line near the 0.8600 threshold.