- EUR/GBP seesaws in a choppy range following the previous day’s jump to weekly top.
- Concerns over Brexit, covid and sluggish market sentiment test the bulls.
- German Retail Sales, ECB’s Lagarde eyed for fresh impulse.
EUR/GBP bulls lack ammunition to extend the previous three-day run-up while taking rounds to 0.8630-35 during early Wednesday. The cross-currency pair jumped the most in a month the previous day amid broad GBP selling and upbeat European data. However, the recent consolidation of the market sentiment and a quiet session restrict the pair’s immediate upside.
A strong print of Eurozone CPI, 2.0% YoY for May, joined the reduction in the Unemployment rate and upbeat German Manufacturing PMI to back the Euro (EUR) bulls the previous day. Also adding to the regional currency’s strength was the US dollar’s broad weakness amid a jump in the US 10-year Treasury yields.
On the other hand, the UK’s zero covid-led death couldn’t favor the British Pound (GBP) as sellers sneaked in after updates revealed that the UK exports of services dropped by £110 billion followed the Brexit, per the research from the Aston University in Birmingham. Additionally, chatters that the heavy unlock in Britain is dangerous amid the covid variant outbreak as well as a downward revision to the UK Manufacturing PMI for May, from 66.1 to 65.6, offered extra reasons to the EUR/GBP buyers to stay hopeful.
It should, however, be noted that the recent pause in the pair’s moves could be traced to the indecisive performance of the risk barometers, namely S&P 500 Futures and US Treasury yields, amid an absence of major data/events.
Looking forward, EUR/GBP traders will keep their eyes on qualitative catalysts for fresh impulse as ECB President Christine Lagarde is up for a speech and could try to reject the tapering woes while downplaying the recent jump in CPI. On the data side, Germany’s Retail Sales for May, expected 10.1% versus 11% prior, will decorate the calendar.
Given the likeliness of the market consolidation phase, EUR/GBP could witness a pullback if the scheduled data/events pose negatives for the EUR.
Technical analysis
A clear break of 50-day SMA, around 0.8625, enables EUR/GBP to aim for a monthly resistance line near 0.8655.
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