- EUR/GBP snaps four-day downtrend, refreshes daily top of late.
- Concerns over no tapering at ECB, virus-led challenges to UK’s unlock favor bulls.
- German trade numbers, ECB President Lagarde’s speech become crucial.
EUR/GBP rises to a fresh intraday high of 0.8560, up 0.20% on a day, as European traders brace for Thursday’s bell. In doing so, the cross-currency pair prints daily gain for the first time in five days as the coronavirus (COVID-19) woes question the UK’s plan of easing the virus-led activity restrictions.
The six-month high infections, above 32,000, pushes the global policymakers, including those from the World Health Organization (WHO) to raise doubts over UK PM Boris Johnson’s unlock deadline of July 19. In this regard, The Independent said, “The prime minister Boris Johnson has failed to deny that as many as 3.5 million people a week will be forced into self-isolation by his decision to scrap all coronavirus restrictions on 19 July.”
The news also quotes UK Health Secretary Sajid Javid suggesting the Covid-19 infections were set to soar to 100,000 a day following the end of mandatory face-masks and social distancing.
On the other hand, Bloomberg came out with the news, quoting anonymous officials, while saying, “European Central Bank policymakers have agreed to raise their inflation goal to 2% and allow room to overshoot it when needed.” The regional central bank is up for conveying the results of a special meeting, the first in 20 years, on Thursday.
Brexit woes also trouble the EUR/GBP traders are the EU-UK keeps struggling to overcome the NI protocol tussle. Recently, UK PM Johnson warned the region to easy demands while also fearing an exodus of Jewish people from Northern Ireland (NI) if he follows the previously signed deal.
It’s worth mentioning that the virus woes weigh on the market sentiment and so does indecision over the key central banks’ future moves. Amid these plays, S&P 500 Futures step back from record top whereas the US 10-year Treasury yields recovery from the lowest since February.
Given the scheduled announcement from the ECB President Christine Lagarde, EUR/GBP traders will remain cautious ahead of the release. Also probing the pair bulls could be the German trade figures for June. Should the ECB policymakers show readiness to ignore higher inflation, to keep the easy monetary policy, EUR/GBP may witness a pullback. However, attention will also be given to the covid woes and other risk catalysts.
Technical analysis
Although the 100-DMA, around 0.8610, pressures the EUR/GBP prices towards the yearly low near 0.8470, the two-week-old horizontal support around 0.8530 and the 0.8500 tests the pair sellers.
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