EUR/GBP eyes 21-month lows as it slips back under 0.8400, on course for worst week since March 2020


  • EUR/GBP is set to end a torrid week at lows amid broad euro underperformance on Friday amid European lockdown fears.
  • The pair is back under the 0.8400 level and eyeing 21-month lows.

EUR/GBP has turned sharply lower on the final trading day of the week, dropping from Asia Pacific levels above 0.8420 to back below 0.8400 as it eyes a test of 21-month lows printed earlier in the week in the mid-0.8380s. Euro underperformance is a major driver of the recent downturn in the EUR/GBP currency pair, amid concerns about a rapid deterioration in the Eurozone economy as the pandemic takes hold on the continent.

Austria announced that it will reimpose a full lockdown on all people from Monday for 20 days, with restrictions to then continue afterward on the unvaccinated. Moreover, the country said that all citizens would be required to be vaccinated by 1 February 2022, or else face hefty fines. More concerning from a financial market perspective is that it seems as though Germany will be following closely behind. Germany’s health minister on Friday said that the health situation in the country had become so grave that a full lockdown, including on the vaccinated, could not be ruled out. According to a senior portfolio manager at Swiss asset manager Vontobel, “a total lockdown for Germany would be extremely bad news for the economic recovery”.

Negative news on the pandemic front in Europe has largely overshadowed a much hotter than expected German PPI report for October, as well as hawkish comments from outgoing ECB Governing Council member and Bundesbank President Jens Weidmann. In fairness, Weidmann is a well-known hawk and has spent most of the last decade unable to influence ECB policy, which is dominated by the doves, so his comments usually do not move the needle for the euro. Weidmann is quitting at the end of the year.

The downside on Friday caps off a torrid week for EUR/GBP. The pair has dropped more than 1.5% from above 0.8500 to current levels under 0.8400, its worst weekly performance since March 2020. Aside from the escalation of the severity of the European Covid-19 situation throughout the week, the pair has also been weighed by strong UK macroeconomic data. Earlier in the week, the latest jobs report provided early indications that there was not a spike in joblessness after the end of the UK government’s furlough scheme in late September and October inflation was hotter than expected.

Most recently, the October Retail Sales report released on Friday prior to the European open beat expectations, though economists put this down to consumers bringing forward their Christmas/holiday shopping amid supply chain concerns. FX strategists also touted the ongoing story of BoE/ECB divergence as a negative. The BoE is expected by many to start hiking interest rate as soon as December, while the key ECB policymakers such as President Lagarde have been trying to guide the market against expecting rate hikes as soon as 2022. Comments from hawkish ECB member Jens Weidmann, who leaves the bank at the end of the year, and comments from the BoE’s Chief Economist were ignored by FX markets.

Elsewhere, the tone of Brexit developments has become more positive this week and most market participants seem to expect the UK and EU to eventually bridge their differences regarding the implementation of the Northern Ireland Protocol.

Movements in bond markets, which reflect the deterioration in the European economic sentiment are also likely weighing. German 10-year yields down 7bps this week to their lowest levels since mid-September just above -0.35%, while UK 10-year yields are down less than 5bps and still comfortably above last week’s 0.82% lows.

EUR/Gbp

Overview
Today last price 0.8398
Today Daily Change -0.0027
Today Daily Change % -0.32
Today daily open 0.8425
 
Trends
Daily SMA20 0.8488
Daily SMA50 0.8509
Daily SMA100 0.8529
Daily SMA200 0.8574
 
Levels
Previous Daily High 0.8427
Previous Daily Low 0.8384
Previous Weekly High 0.8588
Previous Weekly Low 0.8521
Previous Monthly High 0.8624
Previous Monthly Low 0.8403
Daily Fibonacci 38.2% 0.841
Daily Fibonacci 61.8% 0.84
Daily Pivot Point S1 0.8397
Daily Pivot Point S2 0.8369
Daily Pivot Point S3 0.8353
Daily Pivot Point R1 0.844
Daily Pivot Point R2 0.8455
Daily Pivot Point R3 0.8483

 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD extends slide on hawkish Powell comments, trades below 1.1250

EUR/USD holds lower ground after Fed directed bears to five-week low. Bearish MACD signals, clear downside break of two-month-old.Buyers remain cautious until refreshing the 2022 peak, 61.8% FE will challenge bears past 1.1185.

EUR/USD News

GBP/USD: 200-SMA, monthly support test bears post-Fed

GBP/USD battles key supports as sellers poke 1.3460 during early Thursday. The cable pair broke the 200-SMA following the US Federal Reserve’s (Fed) hawkish verdicts. However, clear trading beneath the same becomes necessary to convince the bears.

GBP/USD News

Gold sticks to weekly lows near $1,815 amid firmer yields

Gold price is meandering near one-week lows of $1,813, as the demand for the US dollar remains unabated amid rising two-year Treasury yields. The two-year US rates spike to fresh 23-month highs of 1.192% as the Fed funds futures tumble on expectations of five rate hikes this year.

Gold News

Binance Coin price needs to reclaim $414 to avoid further losses

Binance Coin price must reclaim $414 as support in order for the bulls to target higher levels. BNB may be confronted with a stiff hurdle at the 50% retracement level at $504. However, if Binance Coin fails to slice above $414, the exchange token may drop lower toward the 200 three-day SMA.

Read more

Federal Reserve rate cycle to begin in March, markets reverse on warning Premium

The Federal Reserve kept its rate policy on schedule, indicating in its statement and Chair Jerome Powell’s press conference that it will raise the fed funds rate at the March meeting for the first time in three years. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures