- Pound weakness continued to push EUR / GBP higher.
- Below-expected UK retail sales weighed on the British pound.
- Risk aversion and a stronger dollar give the cross extra support.
The EUR / GBP is holding on to significant weekly gains and is rising again on Friday. It reached 0.8582, the highest level in almost a month. It then undertook a pullback, which quickly found support at the 0.8565 area.
The cross gained momentum and extended the recovery after falling last week to the lowest since February 2020 in the 0.8450 area. A combination of factors acted as a headwind for the British pound, which turned out to be a key positive driver for the cross’s gains.
I know learned on Friday that UK retail sales fell 2.5% in July versus market expectations of a modest 0.4% growth. Additionally, sales excluding fuel also fell short of estimates and fell 2.4%, while June readings were revised down.
Aside from this, concerns that UK job losses will escalate after the employment support scheme (furlough) ends in September appeared to have dashed hopes of a Bank of England rate hike in the near future. .
Secondly, the context of concern in the equity markets and the strength of the dollar they are factors that favor the euro compared to the pound. If this climate continues, the EUR / GBP will have extra support.
Technical levels
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