- EUR/GBP moves higher and approaches the 0.8800 mark.
- GBP sell-off is propping up the downside momentum in the cross.
- Confusion on COVID-19 crisis handling by government weighs on GBP.
The selling bias around the British pound is now helping EUR/GBP to reclaim the 0.8800 neighbourhood and record at the same time fresh multi-day tops.
EUR/GBP edges higher on coronavirus crisis
EUR/GBP has resumed the upside at the beginning of the week, fully reversing Friday’s pullback and charting at he same time a bullish ‘outside day’.
The cross has managed to gather extra pace on Monday on the back of the renewed and strong selling pressure hitting the sterling. Indeed, rising uncertainty and scepticism surrounding the latest set of measures unveiled by No.10 aimed to relax the lockdown have triggered a fresh wave of GBP selling, propelling the cross to new 5-day peaks.
In the docket, flash Q1 GDP figures in the euro area, Germany and the UK will be the salient events later this week.
What to look for around GBP
The recovery in the British Pound appears to have met quite a significant barrier around the 1.2600 neighbourhood vs. the greenback (200-day SMA) and the 0.8860 area vs. the euro (April peaks). Moving forward, the sterling is expected to remain under pressure against the backdrop of rising confusion over the handling of the coronavirus crisis by the UK government and the potential re-opening of the economy, all amidst the forecasted deep recession the country is expected to face in the first half of the year. Further weakness is expected to hit the quid over the prospect of hard UK-EU trade negotiations and the tangible probability that the BoE could pump in extra stimulus at the next meeting.
EUR/GBP key levels
The cross is gaining 0.67% at 0.8787 and faces the next resistance at 0.8863 (high Apr.6) seconded by 0.9019 (monthly high Oct.20 2019) and then 0.9324 (2019 high Aug.12). On the flip side, a drop below 0.8670 (monthly low Apr.30) would expose 0.8655 (100-day SMA) and then 0.8595 (monthly high Jan.14).