EUR/GBP bounces off lows, trades with modest losses around 0.8700 mark
|- EUR/GBP witnessed some selling on Monday and snapped four days of the winning streak.
- Upbeat UK economic outlook contributed to the British pound’s relative outperformance.
- Softer German IFO survey results weighed on the euro and added to the intraday selling.
The EUR/GBP cross quickly recovered around 20 pips from the early European session lows and was last seen trading with only modest losses, near the 0.8700 mark.
The cross continued with its struggle to make it through the 0.8715-20 hurdle and witnessed some selling on the first day of a new trading week. This marked the first day of a negative move in the previous five and forced the EUR/GBP cross to erased a major part of Friday's strong gains.
The British pound's relative outperformance against its European counterpart could be attributed to the upbeat outlook for the UK economy. In an interview with the Telegraph newspaper, Bank of England Deputy Governor Ben Broadbent had forecast very rapid economic growth over the next quarters.
On the other hand, the shared currency was weighed down by the softer German IFO Business Climate Index, which came in at 96.8 for April as against 97.8 estimated. According to IFO’s Economist: “the third wave of coronavirus and bottlenecks in production is subduing the economic recovery.
That said, the prevalent bearish sentiment surrounding the US dollar extended some support to the euro and helped limit the downside for the EUR/GBP cross, rather attracted some dip-buying. This, in turn, supports prospects for an extension of the pair's recent bounce from over one-year lows.
Technical levels to watch
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