EUR/GBP remains positive with downside attempts contained above 0.9000
- EUR/GBP remains slightly positive, supported above 0.9000.
- The announcement of the second lockdown in the UK weighs on the pound.
- On the positive side, hopes of a Brexit deal are underpinning GBP crosses.
The euro found support at 0.8995 earlier on Monday, following a bearish reaction from intra-day highs at 0.904. The pair has ticked up above 0.9000 again and is trading slightly higher on daily charts.
A second UK lockdown hits the pound
The pound has been trading lower against its main rivals on Monday, after the UK Prime Minister, Boris Johnson, announced this weekend the introduction of a second lockdown. The sharp increase of COVID-19 cases, with daily infections beyond 20,000, have raised the alarm about the possibility of surpassing the worst-case scenario of 80,000 victims this winter.
Reports of the lockdown have increased negative pressure on the pound which, nevertheless, remains underpinned by hopes of a trade deal with the European Union. The absence of Brexit news as both parties make the last effort to clinch a last-minute agreement to avoid an unfriendly divorce are keeping the GBP from sharper declines.
On the macroeconomic front, the Eurozone Manufacturing PMI has shown its best reading in 27 months although with a worryingly uneven expansion, with the producers of consumer goods feeling the impact of the pandemic, which alerts about a further deceleration as the impact of the lockdowns kicks in.
The UK Manufacturing PMI has presented a similar picture, with factory activity revised higher and the production consumer-oriented goods falling down into contraction.
Technical Levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
