- EUR/GBP continued with its struggle to capitalize on attempted intraday positive move.
- The technical set-up favours bearish traders and supports prospects for further losses.
The EUR/GBP cross traded with a mild negative bias through the mid-European session and was last seen hovering near three-day lows, just above mid-0.8700s.
The cross once again struggled to capitalize on its intraday positive move and met with some fresh supply near the 0.8780 region amid the prevalent bullish sentiment surrounding the British pound. The UK’s lead in terms of the coronavirus vaccination drive and diminishing odds for negative BoE interest rates in 2021 was seen as a key factor that continued benefitting the sterling.
On the other hand, the shared currency’s currency relative underperformance against its British counterpart could be attributed to concerns about the slow rollout of COVID-19 vaccine in Europe. Adding to this, reports that the German government wants to extend lockdown until March 14th added to worries about a more prolonged economic slowdown and further undermined demand for the euro.
On the economic data front, the German CPI was finalized at 0.8% for January, while French Industrial Production unexpectedly contracted by 0.8% during the same month. This did little to inspire bullish traders or provide any meaningful impetus to the EUR/GBP cross. The lack of any strong buying interest suggests that the near-term bearish pressure might still be far from being over.
Even from a technical perspective, repeated failures near the 0.8800 mark favours bearish traders and supports prospects for an extension of the recent/well-established downward trajectory. Hence, a subsequent slide below the 0.8740-35 region, or near nine-month lows set last Friday, en-route the 0.8700 round-figure mark, remains a distinct possibility.
Technical levels to watch
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