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  • EUR/GBP is rangebound in the mid-0.90s and remains caught between its 21 and 50DMAs.
  • The pair is likely to continue to be driven by the Covid-19 lockdown and vaccination developments on either side of the English Channel.

For most of the last 24 hours, EUR/GBP has been rangebound between roughly the 0.9020s-0.9050s and trades broadly flat on the day. Traders are watching the unfolding of the pandemic on both sides of the English Channel, after Covid-19 concerns in the UK as the country went into a stricter lockdown on Monday supported EUR/GBP on Monday and lifted the pair back above the 0.9000 level.

At the moment, the pair appears to be caught between its 21 and 50-day moving averages which sit at 0.90574 and 0.90126 respectively, the former offering resistance during the European morning and the latter supporting the price action since the Asia Pacific session. With Brexit out of the way, Covid-19, lockdowns and the vaccination race seem likely to be among the dominant themes that will drive EUR/GBP this week and in the months ahead.

UK Covid-19 update…

The UK Chancellor of the Exchequer announced one-off top-up grants for retail, hospitality and leisure businesses worth up to £9,000 per property on Tuesday with the aim of helping businesses through to the Spring. The additional support comes in wake of UK PM Boris Johnson’s announcement last night that England will enter a tougher lockdown until at least midway through February in order to help control the virus.

Meanwhile, in a press conference with UK PM Boris Johnson and his Chief Medical Advisors, the government announced that there would now be daily updates on the number of people vaccinated against the virus and that one in four over 80s have already been jabbed. The government reiterated that while a relaxation of lockdowns from mid-February is possible, uncertainties remain.

The Chief Medical Advisors were asked about concerns that the new Covid-19 variant from South Africa might be resistant to the vaccine but played down these concerns. They were also quizzed on the government’s controversial strategy not to give second jabs after 21 days, but to focus on giving more first-time vaccinations (and instead aiming to get the second jab into people after three months). Again, they played down the risks of this strategy versus the benefits of providing initial protection to a greater number of people. Note that Pfizer and BioNTech have emphasised that there is no evidence to suggest that their vaccines are effective after 21 days without a second shot (though that is only because they didn’t test for just one jab and most scientists agree that the first shot probably does still provide protection after 21 days).