EUR/GBP bid as UK battles new coronavirus variant

• EUR/GBP remains bid after closing above 0.90 on Monday. 
• UK’s coronavirus lockdown restrictions weigh over the British pound.

Sterling is losing ground against its Eurozone counterpart, pushing EUR/GBP higher, with the UK imposing stricter restrictions to control the spread of the new coronavirus variant. 

With the country’s health system facing the risk of being overwhelmed by the new variant, UK’s Prime Minister Boris Johnson ordered England into a new national lockdown on Monday. 

“Everyone in England must stay at home except for permitted reasons during a new coronavirus lockdown expected to last until mid-February,” Johnson said. 

The tougher restrictions overshadowed Brexit and vaccine optimism and weighed over Pound. The currency remains under pressure at press time. EUR/GBP jumped from 0.8940 to 0.9018 on Monday and is currently trading near 0.9030, representing a 0.15% gain on the day. 

Further gains, however, may remain elusive, as EUR/USD is looking heavy. “The latest IMM data show net dollar shorts climbed to $30.4 billion in the week ended Dec. 29 while net EUR/USD longs stood at $21.875 billion, reflecting the market’s view that the trend will continue in 2021,” according to Reuters. 

The hourly chart shows the pair is struggling to capitalize on the breakout above a descending trendline confirmed on Monday. 

Technical levels