- EUR/GBP is lower on Thursday but has remained supported above the 0.8600 level.
- News that the EU is taking the UK to court over Northern Ireland has not shifted the dial much for GBP.
EUR/GBP has traded with a negative bias for most of Thursday’s session, breaking to the downside of the prior 0.8620-0.8670ish weekly range. However, the pair bounced from support at the 0.8600 handle and is now trading around the 0.8620 level again. On the day, the pair looks set to finish with losses of about 0.2% or about 20 pips.
Driving the day
Fundamental catalysts have been few and far between on Thursday. The news that the EU is preparing to take the UK to court over the latter’s decision to unilaterally extend customs waivers to businesses trading between Great Britain and Northern Ireland, which the EU says is a breach of the Northern Ireland protocol. The EU has put the ratification of its trade deal with the UK in the EU parliament on pause.
Meanwhile, there has been positive UK/US trade news; after the UK suspended tariffs on some US goods back on 1 January 2021 (tariffs it had been forced to implement as an EU member that had been involved in the US/EU Airbus/Boeing subsidy dispute), the US has reciprocated and removed tariffs on some UK goods, including single malt whiskies, cheese, cashmere and machinery. UK Trade Secretary Lizz Truss said the move by the US “paves the way for improved trading relationships with the US across the board”.
The above news seems to be giving GBP a helping hand on Thursday, while market commentators also argue that GBP continues to derive support from Wednesday’s budget announcement (which over-delivered on expectations, judging by the bond market reaction, at least), as well as the country’s ongoing vaccine rollout success which seems to be aiding a much faster than expected drop off in the seven-day moving average of the daily Covid-19 death toll (now under 200 per day, versus previous SAGE forecasts it would take until the end of the month to drop to this).