- EUR/GBP moves slightly higher on Monday and recoups some of the previous day’s losses.
- Tensions over the Northern Ireland Protocol in the Brexit deal weigh on the GBP.
- The absence of relevant data releases could cap gains ahead of ECB President Christine Lagarde’s comments.
The EUR/GBP moves slightly higher at the start of the European session on Monday, holding close to the daily high around the region of 0.8375-0.8380.
The crossing captured new purchases near the 0.8355 area, at the low of a week and a half touched early this Monday, and recovered part of the drop of the previous day. The relative underperformance of the pound sterling against the euro comes from amid tensions over Northern Ireland protocol to Brexit deal and disappointing UK GDP figures of Friday.
Having said that, a more aggressive monetary policy decision from the Bank of England should help limit any deeper losses in the British pound, at least for now. It is worth recalling that the BoE raised the benchmark interest rate by 25 basis points and the distribution of votes showed that four out of nine MPC members backed a more aggressive 50 basis point increase in borrowing costs.
On the other hand, European Central Bank officials have rejected expectations of an early tightening of monetary policies. Indeed, ECB member Olli Rehn warned on Saturday that the central bank’s hype on inflation could slow economic growth. On the other hand, Gabriel Makhlouf, a member of the ECB, said that investors are wrong to expect an interest rate hike in June.
Therefore, the market will focus on ECB President Christine Lagarde in her testimony before the European Parliament for a further boost later in the American session. This could prevent investors from opening aggressive bullish positions amid the absence of relevant economic releases from either the UK or the Eurozone.
EUR/GBP technical levels
Source: Fx Street
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