EUR/GBP defends 0.8600 amid mixed plays of Brexit, covid

EUR/GBP remains sidelined around 0.8615, inside the recent 10-pips trading range, during early Thursday morning in Asia. In doing so, the pair struggles to extend the previous day’s pullback amid mixed clues.

Among them, the market’s cautious sentiment ahead of Friday’s key US jobs report and central bankers’ rejection of the relfation fears, versus the jump in the latest inflation data, play a key role.

On Wednesday, the ECB President Christine Lagarde was the latest one to join the chorus singing “no-inflation woes”. The monetary policy decision-maker ruled out any downside implications of the latest rise in the Eurozone Consumer Price Index (CPI) while signaling the extension of easy money policies.

Elsewhere, German Retail Sales disappointed markets with a -5.5% slump versus +7.7% prior rally, weighing on the EUR/GBP prices.

In the case of the UK, Prime Minister Boris Johnson and Health Secretary Matt Hancock tried to convince markets that they’re optimistic even as the Indian covid strain raises doubts over the late June deadline to remove all virus-led lockdown measures. Further, the EU-UK tussles over the Northern Ireland (NI) protocol continue ahead of the key talks during the next week. Recently, the UK’s Brexit Minister David Frost called on, per Independent, “Brussels chiefs to show more ‘common sense’ to help find practical solutions.”

Against this backdrop, S&P 500 Futures remain sideways and the US Treasury yields stay pressured around 1.58% by the press time.

Given the mixed clues from the Brexit, covid and risk barometers, today’s second-tier from Europe and the UK may not be capable of pleasing the momentum traders.

Technical analysis

EUR/GBP funnels down inside the symmetrical triangle between 0.8640 and 0.8580, suggesting further sideways grind.