- EUR/GBP struggled for a firm direction and remained confined in a range on Thursday.
- Signs of economic slowdown undermined the shared currency and capped the upside.
- A slight disappointment from German IFO Sentiment index failed to provide any impetus.
The EUR/GBP cross seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, just above mid-0.9100s.
Following the previous day’s pullback of around 70-80 pips, the cross managed to regain some positive traction during the early part of the trading action on Thursday. The uptick, however, lacked any strong follow-through and ran out of the steam near the 0.9180 region.
The shared currency’s relative outperformance against its British counterpart could be attributed to worries about the emerging signs of an economic slowdown in the Eurozone. The market concerns resurfaced following the release of the flash Markit PMI prints for September.
According to the data released on Wednesday, the economic recovery in the Eurozone took a hit in September amid the second wave of coronavirus infections. In fact, the gauge for the services sector fell into contraction territory, to 47.6 for September.
Adding to this, the headline German IFO Business Climate Index also fell short of market expectations and came in at 93.4 in September. Meanwhile, the Current Economic Assessment arrived at 89.2 points in the reported month as compared to last month’s 87.9 and 89.5 anticipated.
On the other hand, the British pound struggled to gain any meaningful traction and was seen consolidating its recent losses as investors await Brexit updates before placing fresh directional bets. This, in turn, led to a subdued/range-bound price action around the EUR/GBP cross.
Technical levels to watch
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