EUR/GBP rangebound below 0.8650 ahead of ECB President Lagarde speech

  • EUR/GBP is rangebound but a little lower as sterling remains underpinned
  • Focus is will be on comments from ECB President Lagarde at 16:10GMT.

EUR/GBP is seeing rangebound trade on Monday between 0.8620-0.8660 parameters, though with a modestly negative bias, with the pair having slipped from Asia Pacific opening levels in the 0.8660s. Thus, at present, the pair trades lower by about 0.15% or by about 15 pips.

Driving the day

GBP, which had been amongst the best-performing currencies in the G10 earlier on during European trade, has lost some traction in recent hours, coinciding with EUR/GBP recovering off earlier 0.8620 lows to closer to 0.8650 and with GBP/USD dropping back from Asia Pacific highs around 1.4000 into the low 1.3900s. No particular fundamental theme or news is explicitly driving the price action on Monday, though a few factors are arguably supporting sterling versus its EUR counterpart.

Firstly, the UK’s vaccine rollout continues to outpace the rollouts in most other developed market countries (including the Eurozone’s), with over 20M Brits having now received their first jab, while markets are also comforted by the continued fall in new Covid-19 infections and deaths in the country. However, note that some desks now think that this positivity has now been priced into sterling.

Secondly, after last week’s “Roadmap to Reopening” announcement from the UK PM, which outlined the country’s plan for to ease pretty much all pandemic restrictions by mid-June (and injected a decent dose of optimism into GBP), focus is now on this week’s budget, which will be unveiled on Thursday. As usual, much of the contents of what is in the budget has already been leaked to UK press so the GBP market reaction later this week is likely to be limited. According to the Telegraph, the budget is set to contain three distinct “phases”.

Phase One is mainly about ongoing Covid-19 support schemes, which are set to be extended to June (furlough, business rates relief and VAT reductions, stamp duty holiday and “bounce back loans”). Phase Two is going to be about some fiscal injection to accelerate the post-Covid-19 recovery (£5B “restart” fund for giving small business grants, a £22B national infrastructure bank and aid for first-time homebuyers). Phase Three is going to be about paying for everything and is likely to entail freezing income tax rates and a modest increase to corporation tax. Though the support on offer from the UK government is much smaller as a percentage of GDP than President Biden’s stimulus plan in the US, GBP seems to have taken the leaked details of the budget well.

Elsewhere, dovish rhetoric with regards to the recent rise in bond yields from ECB officials is not doing the euro any favours. As a reminder, ECB President Christine Lagarde and other ECB officials last week signalled that the ECB is “closely monitoring” rising long-term bond yields. However, last Friday one ECB official went one step further and outright called for the bank to increase the pace of its asset purchases. Most recently, ECB Governing Council Member François Villeroy de Galhau was on the wires saying (with slightly odd wording) that so much as the recent rise in yields is unwarranted, the ECB must react against it (in clear wording; the ECB should react to any unwarranted rise in yields).

The first tool to use against rising yields, said de Galhau, is the flexibility of the bank’s Pandemic Emergency Purchase Programme (PEPP). Strangely, however, last week (a week where, as noted, ECB members signalled that they were closely watching rising bond yields), the rate at which the ECB bought bond actually dropped versus the week prior. PEPP purchases on the week dropped to around EUR 12B, down from over EUR 17B the week before. An ECB spokesperson said this was down to “higher redemptions”, but slowing asset purchases is hardly the signal the bank wants to be sending at a time when there is increased market scrutiny on the ability of central banks to keep bond market yields in check.

Elsewhere, slightly stronger than expected final Eurozone manufacturing PMIs for February and German Consumer Price Inflation numbers have been unable to distract from negative EU lockdown news (Italy to tighten restrictions in Turin, Milan and surrounding regions and Germany to extend travel restrictions).

Looking ahead, ECB President Christine Lagarde will be speaking at 16:10GMT and there will be a lot of focus on anything she might or might not say on the pace of asset purchases following recent attempts by ECB officials (including Lagarde) to jawbone bond yields lower again.


Today last price 0.8646
Today Daily Change -0.0016
Today Daily Change % -0.18
Today daily open 0.8662
Daily SMA20 0.8722
Daily SMA50 0.8863
Daily SMA100 0.8939
Daily SMA200 0.8987
Previous Daily High 0.8731
Previous Daily Low 0.8656
Previous Weekly High 0.8731
Previous Weekly Low 0.8539
Previous Monthly High 0.886
Previous Monthly Low 0.8539
Daily Fibonacci 38.2% 0.8685
Daily Fibonacci 61.8% 0.8702
Daily Pivot Point S1 0.8636
Daily Pivot Point S2 0.8609
Daily Pivot Point S3 0.8561
Daily Pivot Point R1 0.871
Daily Pivot Point R2 0.8758
Daily Pivot Point R3 0.8784



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.

Feed news

Stop losing your money! 
Learn to trade with us!

24/7 signals + Webinars    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD drops below 1.1900 as dollar rebounds amid risk-aversion

EUR/USD is trading below 1.1900, retreating further from two-week highs of 1.1927 amid resurgent haven demand for the US dollar whilst the Treasury yields recover. Concerns about vaccines in Europe outweigh the Fed's dovish message.


GBP/USD struggles around 1.37 on dollar strength, Brexit and covid concerns

GBP/USD is trying to hold onto 1.37, trading near the March lows. The US dollar is rebounding the from dovish Fed-induced blow. Concerns about Britain's vaccine supplies and Brexit-related issues are weighing on sentiment.


XAU/USD trades as a function of yields, bounces at $1730 support

Spot gold (XAU/USD) prices have seen choppy price action this Friday, dropping from Asia Pacific levels in the upper-$1750s to lows around $1730, before recovering back to the mid-$1740s in recent trade. 

Gold News

Cardano’s Alonzo update might catalyze ADA price for 78% upswing

IOHK revealed Alonzo, the next protocol update for the Cardano blockchain. The upgrade will build on top of the recent releases like Mary, Allegra and so on to bring smart contract capabilities. ADA price falters but holds up as buyers eye a 78% bull run to record levels.

Read more

S&P 500: High high and away, it's the running of the bulls as PPI Freezes up

Up up and away as bulls push more record highs in equity markets. In the short term nothing, it appears, is clouding the picture. Or is it! The ten year yield reawakens with a fairly sharp rise back toward 1.7%.

Read more