- EUR/GBP witnessed a turnaround on Thursday and dropped over 40 pips from one-week tops.
- Renewed USD selling bias prompted short-covering around the GBP and exerted some pressure.
- The latest ECB monetary policy decision failed to impress bulls or lend any support to the cross.
A strong pickup in demand for the British pound dragged the EUR/GBP cross to fresh daily lows, though lacked any follow-through selling below the 0.8600 round-figure mark.
The cross struggled to capitalize on its intraday positive move to one-week tops, instead witnessed a dramatic turnaround from the 0.8640-45 region and has now erased a major part of the overnight gains. As investors digested the recent Brexit developments, renewed US dollar selling bias prompted aggressive short-covering around the British pound. This, in turn, was seen as a key factor that exerted some downward pressure on the EUR/GBP cross.
On the other hand, the euro bulls were a bit disappointed after the European Central Bank (ECB) steered clear of any taper talk at the latest policy meeting on Thursday. In the post-meeting press conference, ECB President Christine Lagarde reiterated that risks remain broadly balanced. The ECB also released a fresh round of staff projections and lifted its inflation and GDP growth forecasts, though did little to provide any lift to the shared currency.
With the GBP price dynamics turning out to be an exclusive driver of the EUR/GBP pair's intraday move, fresh COVID-19 jitters should help limit any further downside, at least for the time being. There are speculations that the UK may delay plans to end restrictions fully on June 21 in light of the spread of the so-called Delta variant. This makes it prudent to wait for acceptance below the 0.8600 mark before traders start positioning for any further depreciating move.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.