- EUR/GBP bulls pause after three-day uptrend, ahead of the key data.
- Sour sentiment, Brexit and a light calendar offered sluggish start to the week.
- EU GDP, jobs report seems less worrisome than the UK data.
EUR/GBP eases inside an immediate 10-pip trading range surrounding 0.8500 during Tuesday’s Asian session. The cross-currency pair rose for three consecutive days before the recent sideways performance ahead of the key EU-UK data.
Behind the pair’s recovery moves from the monthly low, triggered Thursday, are the chatters that the European Central Bank (ECB) will precede the Bank of England (BOE) in dialing back the easy money policies. As per the latest Reuters polls, the ECB is up for tapering by late 2021 and could hint at rate hikes during 2022 whereas the BOE’s rate hike isn’t expected before 2023.
The reason for the pessimism surrounding the GBP could be the UK government’s failure to benefit from the Brexit. While the Northern Ireland (NI) protocol is the key issue, the latest woes could be heard relating to immigration, as the Mersile News said, “Former EU Brexit negotiator Michel Barnier last week called for a five-year moratorium on all immigration into the EU — a move that would effectively ban British settlement and all others.”
It’s worth noting that the Euro’s gains from the US dollar’s drawdown on Friday, followed by a sluggish recovery, add to the pair’s upside momentum.
Furthermore, the market’s risk-off mood and the bloc’s comparatively better covid conditions also keep EUR/GBP buyers hopeful.
However, today’s preliminary readings for the Q2 Eurozone GDP, expected to remain unchanged at 2.0% QoQ and 13.7% YoY, not to forget quarterly employment change, forecast -0.5% versus -0.20% previous readouts, challenge the EUR/GBP bulls. Though, the UK’s jobs report is also anticipated to flash downbeat signals and hence the quote traders may have to rely on the risk catalysts for fresh impulse.
Forecasts suggest the UK Unemployment Rate for three months to June to remain unchanged around 4.8%. Hence, the monthly Claimant Count Change, prior -114.8K, will be the key to watch.
Technical analysis
Sustained trading beyond 0.8500, comprising multiple levels since April, becomes necessary for EUR/GBP bulls to keep reins.