- EUR/GBP keeps the gains despite downbeat German PPI data.
- ECB anticipates Euro GDP to fall between 5% and 12% this year.
- EU-German tension weighs on the regional currency, Brexit/virus woes disappoint Pound buyers.
- EU GDP will be the key to watch apart from the qualitative catalysts.
EUR/GBP pays a little heed to German PPI as it rises to 0.8850, up 0.18% on a day, during the early Friday. The downbeat German figures seem to have failed to disappoint the pair traders as GDP figures from Germany and Europe are still in the pipeline. Also could be favoring the pair is pessimism over the UK concerning Brexit/virus outbreak.
Germany’s Producers Price Index slipped below -0.60% and -1.8% respective forecasts on MoM and YoY to -0.7% and -1.9% in that order. Although the wait for the key data restricts the pair’s immediate downside, despite weak PPI figures, the EU-German tension guards the pair’s immediate moves.
Ever since the European Central Bank (ECB) was challenged on its proportionality over the stimulus, by the German court, the leaders of the bloc jostle with the German policymakers to justify their superiority. Recently, French FM Bruno Le Maire said the German Court’s decision suggests limits to monetary policy, needs EU Recovery Fund. Earlier, the ECB executive board member Fabio Panetta said that the European Central Bank is under the jurisdiction of the ECJ (European Court of Justice).
Over the counter, the European Union (EU) and the UK policymakers are also showcasing their rivalry via the Brexit issues. Despite being the third round of negotiation, the diplomats still don’t have any answers for fisheries, Northern Ireland borders and Legislative constitution after the official departure on December 31, 2020.
Elsewhere, markets’ risk-tone have been positive off-late considering the improving odds of another stimulus package from the US. However, virus data keep spreading fears of wave 2.0 and check the optimism.
That said, US 10-year Treasury yields remain mildly positive while markets in Europe are likely to respond to the data.
Moving on, traders will keep eyes on the German and European preliminary GDP figures for Q1 2020. Relating to this, TD Securities said, “We get the first estimate of German Q1 GDP today, where we look for a -2.5% q/q decline (market -2.3%). This would leave Germany substantially outperforming the Eurozone overall, where the initial GDP estimate came out at -3.8% q/q, and the second print is also due later this morning.”
Repeated failures to cross 50-day SMA favor the pair’s pullback towards revisiting a 21-day SMA level of 0.8765. Though, a daily closing beyond the same 0.8860 resistance can drive the quote further north towards 0.9000 round-figure comprising multiple levels marked in March.