- EUR/GBP staged a modest bounce from multi-month lows and snapped five days of losing streak.
- The British pound was weighed down by disappointing UK monthly retail sales data for January.
- The shared currency held steady and seemed rather unaffected by mixed Eurozone PMI prints.
The EUR/GBP cross built on its steady intraday positive move and refreshed daily tops, around the 0.8665-70 region during the early European session.
The cross witnessed a modest short-covering move on the last trading day of the week and for now, seems to have snapped five consecutive days of the losing streak. The uptick assisted the EUR/GBP cross to recover a major part of the previous day’s losses to nine-month lows, though lacked any strong bullish conviction.
The British pounds underperformance against its European counterpart could be attributed to Friday’s disappointing release of the UK monthly retail sales figures. The UK Office for National Statistics reported that headline sales dropped 8.2% in January and core sales (excluding auto motor fuel sales) fell 8.8% MoM, worse than anticipated.
On the other hand, the shared currency benefitted from the prevalent US dollar selling bias and seemed rather unaffected by mixed Eurozone PMI prints for February. In fact, the flash version of the German Manufacturing PMI rose to 60.6 for February as against consensus estimates pointing to a modest fall to 56.5 from 57.1 previous.
Separately, the Eurozone Manufacturing PMI also came in better than market expectations, though was offset by a slight disappointment from Services PMI prints. The data, however, did little to dent the intraday bullish tone surrounding the EUR/GBP cross, albeit the upside remains limited and runs the risk of fizzling out quickly.
The sterling might continue to benefit from the UK’s impressive pace of COVID-19 vaccinations. This would allow Prime Minister Boris Johnson to lift lockdown restrictions in stages and get the economy moving. Hence, it will be prudent to wait for some follow-through buying before confirming that the EUR/GBP cross has bottomed out in the near-term.
Technical levels to watch
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