- EUR/GBP remained under some selling pressure for the second straight session.
- The German court ruling on ECB’s bond-buying weighed on the shared currency.
- The British pound remains resilient and contributed to the pair’s offered tone.
The offered tone surrounding the shared currency dragged the EUR/GBP cross back closer to multi-week lows, with bears awaiting a sustained break below the 0.8700 mark.
The cross extended the previous day’s pullback from levels beyond the 0.8800 mark, or near two-week tops and witnessed some follow-through selling for the second consecutive session on Tuesday.
The common currency started losing ground since the early European session after the German court ruled on Tuesday that the ECB’s bond-buying did not respect the principle of proportionality.
Germany’s constitutional court further added that the ECB exceeded the monetary policy mandate, which led to a selloff in the European bond markets and the spillover effect weighed on the euro.
On the other hand, the British pound continued showing some resilience and seemed unaffected by increasing prospects for an extended lockdown in the UK, renewed concerns about hard-Brexit.
On the economic data front, the final version of the UK Services PMI was revised higher to 13.4 for April as compared to 12.3 estimated previously and extended some support to the sterling.
Despite the pullback, the cross remains well within a one-month-old trading range near the very important 200-day SMA, warranting some caution before placing aggressive directional bets.
Hence, it will be prudent to wait for some strong follow-through selling in order to confirm a near-term bearish breakdown and positioning for any further near-term depreciating move.
Technical levels to watch
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