EUR/GBP is back above the 0.8900 level as EUR outperforms and sterling struggles. Sterling is being weighed by lockdown concerns and bad data, while the euro has been immune to bad news. Amid a divergence in euro and sterling strength on the final trading day of the week that has seen the former as one of the outperforming G10 currencies on the day and the latter amongst the worst, EUR/GBP has rallied back above the 0.8900 level and is eyeing a test of highs of the week above 0.8920. On the day, the pair trades with gains of more than 0.6% or around 50 pips. Euro outperforms The euro is the best performing G10 currency on Friday, aided by broadly better than expected preliminary January PMI numbers out for the Eurozone this morning (manufacturing and services PMI both beat expectations), as well as the continued tailwind from Thursday slightly more hawkish than expected outcome of the ECB monetary policy decision; as a reminder, the ECB adopted a slightly more hawkish interpretation on the PEPP, suggesting in the statement that the full EUR 1.85T envelope not need all be used and Lagarde sounded a little more upbeat than some were expecting in the press conference. Meanwhile, the euro has largely shrugged bad news on vaccine front and out of Italy; on the former, AstraZeneca informed the EU that it is having delivery issues. This comes after Pfizer also informed the bloc that it would be delivering less vaccines than anticipated over the coming weeks. Meanwhile, according to reports out during the European morning session, Italian PM Giuseppe Conte is considering the possibility of early elections given his strong position in the polls. An election is seen as a market negative as it re-introduces uncertainty as to whether anti-EU Italian political parties might again seize control of the Italian government. Sterling suffers Not the worst performer on the day in the G10, but certainly amongst the bottom four, GBP has struggled on the final trading day of the week. A few factors have been weighing on sterling sentiment on; firstly, data has been grim. Headline retail sales were up just 0.3% MoM in December (consensus was for a 1.2% MoM gain). Meanwhile, preliminary Markit PMI numbers for January were ugly, with the services index dropping to 38.8 from 49.4 in December (consensus was for a much smaller drop to 45.0), thus dragging the headline composite index down to 40.6 versus expectations for 45.5. Manufacturing held up a little better and was still above 50.0, implying manufacturing activity is still growing this month. Elsewhere, though the latest Covid-19 numbers make for more optimistic reading (the R rate is estimated to be back below 1.0 again across the country and is even lower in London), government talk on the prospect of an end to lockdown left much to be desired; government scientists are reportedly recommending that the national lockdown be extended into the summer and then for a gradual tiered release to follow. Meanwhile, the government is reportedly considering a full-scale closure of its borders in order to prevent the arrival of new variants of the virus from elsewhere. EUR/GBP key levels FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next GBP/USD finds support above 1.3630 on Friday, ends week higher FX Street 1 year EUR/GBP is back above the 0.8900 level as EUR outperforms and sterling struggles. Sterling is being weighed by lockdown concerns and bad data, while the euro has been immune to bad news. Amid a divergence in euro and sterling strength on the final trading day of the week that has seen the former as one of the outperforming G10 currencies on the day and the latter amongst the worst, EUR/GBP has rallied back above the 0.8900 level and is eyeing a test of highs of the week above 0.8920. 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