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  • EUR/GBP was seen consolidating its recent sharp losses to multi-month lows.
  • A delay in the rollout of COVID-19 vaccines weighed on the common currency.
  • Diminishing odds of BoE rate cut underpinned the sterling and capped gains.

The EUR/GBP cross lacked any firm directional bias and seesawed between tepid gains/minor losses, around the 0.8800 mark on Wednesday.

The cross now seems to have entered a bearish consolidation phase and remained confined in a narrow trading band just above nine-month lows set in the previous session. Investors turned cautious and refrained from placing aggressive bets, rather preferred to wait on the sidelines ahead of the Bank of England (BoE) meeting on Thursday.

The upside remained capped amid the offered tone surrounding the shared currency, which was being weighed down by concerns that the slow rollout of COVID-19 vaccines in Europe could hamper the economic recovery. Even an upward revision of the Eurozone Services PMIs did little to impress bulls or provide any impetus to the EUR/GBP cross.

The negative factor, to a larger extent, was offset by the emergence of some selling around the British pound. That said, diminishing odds for any BoE rate cut in 2021 continued lending some support to the sterling., This was seen as another factor that failed to assist the EUR/GBP cross to register any meaningful recovery, at least for the time being.

From a technical perspective, the EUR/GBP pair’s inability to gain traction suggests that the recent bearish trend might still be far from being over. However, bearish traders might still wait for sustained weakness below the 0.8800 round-figure mark before positioning for any further depreciating move, towards testing the 0.8765-60 support zone.

Technical levels to watch