- EUR / GBP cannot capitalize on its intraday rally above the 0.9100 level.
- The ECB’s dovish expectations and the rise in COVID-19 cases in Europe weigh on the euro.
- Brexit-related uncertainties weigh on the GBP and could help limit deeper losses.
The crossing EUR/GBP has rapidly retreated around 65 pips during the European session on Monday, falling to new daily lows around the region of 0.9040. At the time of writing, the cross is recovering above the 0.9050 level, still negative on the day.
The crossing has once again had difficulties finding acceptance above the round level of 0.9100 and they have encountered new sales at higher levels. The relatively underperformance of the common currency versus its British counterpart could be attributed to the risk of a double recession amid the second wave of coronavirus infections in Europe.
It is worth reporting that France announced a daily record of new coronavirus infections on Sunday, with the confirmed number reaching 52,000 new daily cases. On the other hand, Italy It has imposed partial blockade measures, which will remain in force until November 24. In the meantime, Spain passed a state of emergency and announced a national curfew from 11 p.m. to 6 a.m. to contain the virus outbreak.
Events have further fueled the Speculation that the European Central Bank will be pressured to extend the Pandemic Emergency Purchase Program in December. This, coupled with expectations that the ECB will lower its economic projections, has further affected the common currency, which in turn has been seen as a key factor putting some pressure on the EUR / GBP cross.
The euro has lost some additional ground after the release of the IFO’s German Business Climate Index, which fell to 92.7 points in October compared to 93.2 the previous month and estimates that pointed to a reading of 93.0. Additionally, the IFO Expectations Index was also below expectations, reaching 95.0 points in October compared to 97.4 in the previous month and 96.5 expected.
The decline is likely to remain limited, at least for now, as GBP bulls could refrain from opening aggressive positions. amid lingering Brexit-related uncertainties. Even from a technical perspective, the EUR / GBP cross has shown some resistance near the 100 day EMA, which warrants some caution before positioning for any further bearish movement.
EUR / GBP technical levels
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Credits: Forex Street
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