- EUR/GBP is back above the 0.8900 level as EUR outperforms and sterling struggles.
- Sterling is being weighed by lockdown concerns and bad data, while the euro has been immune to bad news.
Amid a divergence in euro and sterling strength on the final trading day of the week that has seen the former as one of the outperforming G10 currencies on the day and the latter amongst the worst, EUR/GBP has rallied back above the 0.8900 level and is eyeing a test of highs of the week above 0.8920. On the day, the pair trades with gains of more than 0.6% or around 50 pips.
The euro is the best performing G10 currency on Friday, aided by broadly better than expected preliminary January PMI numbers out for the Eurozone this morning (manufacturing and services PMI both beat expectations), as well as the continued tailwind from Thursday slightly more hawkish than expected outcome of the ECB monetary policy decision; as a reminder, the ECB adopted a slightly more hawkish interpretation on the PEPP, suggesting in the statement that the full EUR 1.85T envelope not need all be used and Lagarde sounded a little more upbeat than some were expecting in the press conference.
Meanwhile, the euro has largely shrugged bad news on vaccine front and out of Italy; on the former, AstraZeneca informed the EU that it is having delivery issues. This comes after Pfizer also informed the bloc that it would be delivering less vaccines than anticipated over the coming weeks. Meanwhile, according to reports out during the European morning session, Italian PM Giuseppe Conte is considering the possibility of early elections given his strong position in the polls. An election is seen as a market negative as it re-introduces uncertainty as to whether anti-EU Italian political parties might again seize control of the Italian government.
Not the worst performer on the day in the G10, but certainly amongst the bottom four, GBP has struggled on the final trading day of the week. A few factors have been weighing on sterling sentiment on; firstly, data has been grim. Headline retail sales were up just 0.3% MoM in December (consensus was for a 1.2% MoM gain). Meanwhile, preliminary Markit PMI numbers for January were ugly, with the services index dropping to 38.8 from 49.4 in December (consensus was for a much smaller drop to 45.0), thus dragging the headline composite index down to 40.6 versus expectations for 45.5. Manufacturing held up a little better and was still above 50.0, implying manufacturing activity is still growing this month.
Elsewhere, though the latest Covid-19 numbers make for more optimistic reading (the R rate is estimated to be back below 1.0 again across the country and is even lower in London), government talk on the prospect of an end to lockdown left much to be desired; government scientists are reportedly recommending that the national lockdown be extended into the summer and then for a gradual tiered release to follow. Meanwhile, the government is reportedly considering a full-scale closure of its borders in order to prevent the arrival of new variants of the virus from elsewhere.
EUR/GBP key levels
|Today last price||0.8907|
|Today Daily Change||0.0049|
|Today Daily Change %||0.55|
|Today daily open||0.8858|
|Previous Daily High||0.8871|
|Previous Daily Low||0.883|
|Previous Weekly High||0.9037|
|Previous Weekly Low||0.8866|
|Previous Monthly High||0.923|
|Previous Monthly Low||0.8929|
|Daily Fibonacci 38.2%||0.8846|
|Daily Fibonacci 61.8%||0.8855|
|Daily Pivot Point S1||0.8835|
|Daily Pivot Point S2||0.8812|
|Daily Pivot Point S3||0.8794|
|Daily Pivot Point R1||0.8876|
|Daily Pivot Point R2||0.8894|
|Daily Pivot Point R3||0.8917|
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.