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  • EUR/GBP witnessed some heavy selling on Thursday and extended the overnight retracement slide.
  • The GBP bulls seemed unaffected by fears of renewed lockdown in the UK and Brexit uncertainties.
  • Expectations of further policy easing held the EUR bulls on the defensive ahead of the ECB minutes.

The EUR/GBP cross weakened further below the 0.9100 round-figure mark and dropped to two-day lows during the first half of the European trading action.

The cross extended the previous day’s sharp retracement slide from eight-day tops and witnessed some follow-through selling on Thursday amid some buying around the British pound. The GBP bulls largely shrugged off fears of stricter lockdown measures in the UK and even seemed unaffected by persistent  Brexit related uncertainties.

It is worth reporting that the UK government is considering additional local COVID-19 restrictions for parts of northern England to contain a fresh outbreak of the novel coronavirus. On the Brexit front, Irish Foreign Minister Simon Coveney said on Wednesday that level playing field is a serious issue and a landing zone on fishing is hard to envisage.

On the other hand, the shared currency struggled to gain any meaningful traction amid speculations of more ECB easing, especially after the dismal inflation figures for the month of September. This was reinforced by the latest comments by the ECB vice-president Luis de Guindos, saying that inflation expectations are low.

Hence, Thursday’s key focus will be on the release of the ECB monetary policy meeting minutes, which might infuse some volatility across the EUR pair. Apart from this, there isn’t any manor market-moving economic data due for release, either from the Eurozone or the UK, warranting some caution before placing aggressive bearish bets.

Technical levels to watch