- EUR/GBP fades he move to 0.8555.
- GBP-recovery weighs on the cross.
- ECB’s Lagarde speaks later in the day.
The now better tone in the British pound is forcing EUR/GBP to leave behind initial gains and recede to the 0.8530/25 band.
EUR/GBP remains sidelined so far in 2020
The European cross is adding to Friday’s advance against the backdrop of a generalized better tone in the greenback, which in turn is weighing on both the shared currency and the quid.
In the meantime, the cross keeps the rangebound theme intact so far this year, with gains capped by the 0.8600 neighbourhood and the downside limited to the mid-0.8400s.
So far, the cross is seen following the broader risk appetite trends, although the upcoming UK-EU negotiations on the trade front promise to be a key driver for the rest of the year, all coupled with prospects of a rate cut by the BOE, speculations of a recovery of fundamentals in the euro bloc and the ‘wait-and-see’ stance from the ECB.
Later in the day, ECB’s C.Lagarde is due to speak in what will be the sole event in the Old Continent at the beginning of the week. Later in the week, the UK docket includes the labour market report (Tuesday), Mortgage Approvals (Wednesday) and services PMI (Friday). On this side of the Channel, the ECB will hold its monthly meeting on Thursday while advanced PMIs in the core Euroland are expected on Friday.
EUR/GBP key levels
The cross is gaining 0.12% at 0.8533 and faces the next hurdle at 0.8595 (2020 high Jan.14) seconded by 0.8658 (100-day SMA) and finally 0.8779 (200-day SMA). On the flip side, a breakdown of 0.8487 (weekly low Jan.17) would expose 0.8454 (2020 low Jan.8) and then 0.8275 (2019 low Dec.13).