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  • EUR/GBP edged lower for the second straight day and drifted back closer to over one-week lows.
  • Friday’s Eurozone CPI print did little to impress the euro bulls or provide any impetus to the cross.
  • The sterling maintained its bid tone despite renewed lockdown measures in northwest England.

The EUR/GBP cross maintained its offered tone near daily lows, around the 0.9030-25 zone and had a rather muted reaction to the flash Eurozone CPI figures.

Following an early uptick to the 0.9060 region, the cross met with some fresh supply and turned lower for the second consecutive session on Friday. The downtick also marked the third day of a negative move in the previous four and dragged the EUR/GBP cross back closer to over one-week lows set in the previous session.

The British pound maintained its bid tone on the last trading day of the week and seemed rather unaffected by new restriction on 4.3 million people in northwest England. The UK government imposed a tougher lockdown in Greater Manchester, parts of West Yorkshire and East Lancashire after the recent rise in new coronavirus cases.

On the other hand, the shared currency witnessed some profit-taking amid a modest USD rebound from two-year lows. The euro bulls largely shrugged off Friday’s release of the flash Eurozone consumer inflation figures, which showed that the headline CPI is expected to rise by +0.4% YoY in July from the 0.3% increase in the previous month.

Other data released this Friday showed that GDP across the euro area plunged by a record 12.1% QoQ during the second quarter of 2020. This, in turn, was seen as one of the key factors behind the common currency’s relative underperformance against its British counterpart.

It will now be interesting to see if the cross continues to attract some dip-buying at lower levels or bears take out an important support near the key 0.9000 psychological mark. A convincing breakthrough will negate prospects for any near-term appreciating move, rather prompt some aggressive technical selling and pave the way for additional weakness.

Technical levels to watch