EUR / GBP falling attempts are contained above 0.9000

  • EUR / GBP cuts Thursday’s losses after bouncing off 0.9000.
  • The pound is down with Brexit and a dovish BoE.

The euro’s bearish reversal from the highs of 0.9065 on Thursday has not been tracked below 0.9000 and the pair regained ground lost on Friday to close the week slightly higher.

BoE and Brexit continue to weigh on demand for the pound

The pound lost ground against the euro on Friday, with the dust from the US election slowly settling. The market is taking in the impact of the dovish Bank of England monetary policy decision on Thursday and the deadlock in Brexit negotiations with the year-end deadline just around the corner.

The Bank of England kept its main interest rate unchanged at 0.1% and extended its bond purchase program by £ 150bn to a total target of £ 895. On the day the second lockdown began in the UK, the bank increased its stimulus program to offset the economic impact of the COVID-19 crisis.

Furthermore, the stalemate in Brexit negotiations continues to erode confidence in the pound. Previous hopes for a trade deal have cooled as the last two weeks of intense talks ended without significant progress, and representatives from both sides reiterate that positions are still far off on key issues.

However, talks are expected to continue in London over the weekend, which remains hopeful that a deal is still possible to avoid a tough exit from the Union. This keeps the British pound facing steeper declines against its major peers.

Credits: Forex Street

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