- EUR/GBP struggles to keep the corrective pullback, pressured of late.
- Virus woes seem ignored as BOE seems more optimistic than ECB.
- German Retail Sales, ECB’s Lagarde and UK PMI eyed.
EUR/GBP fades early Asian bounce while dropping back to 0.8575 heading into Thursday’s London open. The cross-currency pair portrays the traders’ indecision amid the coronavirus (COVID-19) woes in the UK and the Bank of England’s (BOE) optimism, not to forget mixed updates over Brexit. The quote’s lack of momentum could also be linked to the mixed data from the Eurozone and the UK, as well as cautions sentiment before another round of data release.
Although the highest covid daily infections in 2021 test the UK’s economic recovery, BOE’s outgoing policymaker Andy Haldane remains optimistic over the inflation outlook and backs tapering. On the other hand, European Central Bank (ECB) Governing Council member and Bank of France Head Francois Villeroy de Galhau sounds a bit cautious as the bloc’s inflation figures remain well below the targets.
It’s worth noting that the European Union’s (EU) formal three-month extensions to British sausage sell in the Northern Ireland (NI) and Belfast court’s backing to the NI protocol adds strength to the British pound (GBP). On the same line, the German-UK agreement over the post-Brexit defense and foreign policy declaration add to the sterling’s gains.
Elsewhere, the market’s sentiment remains mixed and offers little help to reverse the downtrend. That said, stock futures are mildly bid but the Treasury yields remain strong and tame the optimists.
Moving on, German Retail Sales, expected 10.1% YoY versus 4.4% prior, may probe the pair sellers on matching the forecasts. However, the UK PMIs should press downbeat figures and ECB President Christine Lagarde need not sound too hawkish to keep the EUR.GBP bears hopeful. Furthermore, BOE Governor Andrew Bailey is also up for a speech and may reiterate his bullish bias, which in turn could weigh on the pair.
Technical analysis
A five-week-old descending trend channel keeps EUR/GBP bears hopeful.