- EUR/GBP tests fresh 2020 highs around 0.9500, drops afterwards.
- EUR-selling picks up pace amidst stronger dollar.
- Flash IFO Business Climate plunged to 87.7 for the current month.
After printing fresh YTD highs around the 0.9500 mark, EUR/GBP sparked a correction lower to the current 0.9270 region on the back of renewed EUR-selling.
EUR/GBP advances to 0.9500, highest since January 2009
EUR/GBP climbed to the 0.9500 neighbourhood earlier in the session, the highest level in over a decade. However, the continuation of the buying pressure in the greenback is now hurting the euro and therefore prompting the cross to shed part of those gains.
On Wednesday, it was the turn of the sterling to suffer the buying pressure in the greenback, which dragged Cable to the mid-1.1400s, levels last seen back in 1985 around the Plaza Accord.
Also weighing on the quid is the rising probability that the BoE could relax further its monetary conditions in order to counteract the impact of the COVID-19 on the UK economy.
Adding to the heightened weakness around the shared currency, preliminary figures of the German Business Climate tracked by the IFO institute dropped to 87.7 for the month of March, the lowest level since August 2009. The morale around German companies and managers stay depressed and seems to be paving the way for a recession in the economy in the short-term horizon.
Additionally, EUR is losing extra ground after the ECB announced a €750 billion QE programme late on Wednesday, expected to run at least until year-end, although its extension will greatly depend on the developments around the coronavirus.
EUR/GBP key levels
The cross is losing 1.28% at 0.9265 and a drop below 0.9247 (low Mar.19) would expose 0.9019 (monthly high Oct.10 2019) and finally 0.8748 (200-day SMA). On the upside, the next hurdle aligns at 0.9499 (2020 high Mar.19) seconded by 0.9649 (monthly high January 2009) and then 0.9804 (monthly high December 2008).
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