- EUR/GBP gained some positive traction and built on the overnight bounce from one-year lows.
- The euro benefitted from weaker USD and better-than-expected German Gfk Consumer Climate.
- The British pound was seen consolidating its recent strong gains and did little to influence the cross.
The EUR/GBP cross edged higher through the mid-European session and was last seen hovering near the top end of its weekly trading range, around mid-0.8600s.
The cross witnessed some short-covering move on Thursday and has now recovered over 100 pips from one-year lows, around the 0.8540 region touched in the previous session. As investors digest a delay in the COVID-19 vaccine in Europe, the shared currency gained strong positive traction amid a broad-based US dollar weakness.
The euro got an additional boost following the release of the German GfK Consumer Climate Index, which improved to -12.9 in February from the previous month’s upwardly revised reading of -15.5. This, in turn, was seen as the key factor that assisted the EUR/GBP cross to recover its weekly losses to the lowest level since February 2020.
On the other hand, the British pound was seen consolidating its recent strong gains to almost three-years against its American counterpart and did little to influence the EUR/GBP cross. That said, the impressive pace of COVID-19 vaccinations in the UK and the government’s plan to ease lockdown should help limit any meaningful slide for the sterling.
This makes it prudent to wait for some strong follow-through buying before confirming that the EUR/GBP cross has bottomed out in the near-term and positioning for any further appreciating move. Nevertheless, the ongoing momentum looks strong enough to push the cross further towards testing a one-month-old descending trend-line resistance near the 0.8700 mark.
Technical levels to watch
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