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  • EUR/GBP is below the 0.8550 level, having briefly been as low as the low 0.8520s.
  • The near-term economic outlook in the UK continues to look strong relative to the EU amid their divergent pandemic fortunes.

EUR/GBP is below the 0.8550 level, having briefly been as low as the low 0.8520s, but not gotten to close to testing Monday’s sub-0.8510 lows. The pair seems content to trade just above these multi-month lows in the knowledge that the comparatively successful vaccine rollout in the UK, as well as the fact that the country has already come out the other side of its surge in B.1.1.7 (more transmissible) Covid-19 infections, means that it has a better near-term economic outlook than that of the Eurozone, which remains in lockdown as it is struggling to contain its first wave of the above-mentioned B.1.1.7 variant, with these containment efforts hampered by the bloc’s comparatively slow vaccine rollout.

If the pair does see some retracement higher, the 21-day moving average at 0.8588 will be a level of resistance worth noting and above that, the mid-March highs around 0.8640 might be the next area where long-term bears may look to add shorts. Conversely, beyond the multi-month lows at just above 0.8500, the next key area of support is all the way down at 0.8300.

Driving the day

There have not been too many by way of fresh fundamental catalysts for EUR/GBP to trade off of, hence the subdued price action. German and Spanish preliminary Consumer Price Inflation reports for the month of March both showed a jump in the YoY rate of HICP inflation, as expected, thus the FX markets reaction to each data release was minimal.

Similarly, the FX market reaction to the stronger than expected French Consumer Confidence and European Commission Business and Consumer Confidence surveys for the month of March was also minimal, given these surveys are now seen as out of date; most EU countries having toughened lockdown restrictions over the last few weeks, meaning any strength in March is likely to be unwound in April.

In terms of the latest with regards to the pandemic; German health officials are again on the offensive against the AstraZeneca vaccine and have now halted the rollout of the vaccine to women under the age of 60 amid growing concerns about the vaccines link to thrombosis. It remains unclear whether the Germans are onto something with regards to the vaccine causing blood clots in younger women, but the latest news is unlikely to aid already rock-bottom levels of confidence in the AstraZeneca vaccine, which will reduce take up and may further hurt the bloc’s already struggling vaccine rollout.

Turning to UK pandemic news, things remain upbeat; the Evening Standard recently reported that the Novavax Covid-19 vaccine could be ready for distribution in the UK within four weeks, making it the fourth vaccine to be rolled out in the country after the Pfizer/BioNtech, AstraZeneca and Moderna vaccines (the latter is also scheduled to begin arriving in the UK in April). With two new vaccines slated to be arriving in the UK soon, hopes are high that the country’s vaccine rollout will continue to progress well and, as a result, the country roadmap to reopening will remain on course. The biggest threat to the country’s reopening plan is if any new, more vaccine-resistant variants emerge in the country and start to send hospitalisations higher again, but with tough travel restrictions likely to remain in place for most of the summer, this seems unlikely (for now).