- EUR/GBP bullish attempt from 0.8708 hits resistance right ahead of 0.8800.
- The euro fails to take advantage of the overall pound weakness.
- Concerns about the future of the ECB QE programme are weighing on the EUR.
The euro upside attempt observed on Thursday’s European session has lost steam right below 0.8800 resistance area before pulling back during the US trading time, to settle around the 0.8750 level.
The euro fails to take advantage of pound’s weakness
The EUR/GBP remains trading sideways in spite of the broad-based sterling weakness. The Britsh pound is losing ground against its main rivals, namely the USD and the JPY, hit by the strong impact of the COVID-19 crisis, with the country still far from easing restrictions, and Brexit uncertainty.
The euro, however, is suffering on the back of the German constitutional court ruling, which called the ECB to justify bonds-purchases earlier this week. The decision off the Berlin high court has raised doubts about the future of Bank’s monetary policy tools, undermining confidence on the common currency.
EUR/GBP vulnerable in the mid-term
In the bigger picture, the FX analysts at Rabobank see the pound more vulnerable than the euro, “Given concerns that the future arrangements between the UK and the EU may not be resolved by June, we expect GBP to be under pressure. We see EUR/GBP at 0.88 on a 1 to 3-month view with upside risk.”
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