- EUR / GBP is virtually unchanged at the start of the European session on Monday.
- Optimistic economic data and rate hike expectations lift demand for the GBP.
- Signs of a delay in the ECB rate hike hurt confidence around the euro.
The crossing EUR / GBP consolidates around the 0.8600 level during the European session on Monday before the release of German inflation data. At the time of writing, the cross is trading at 0.8602, up 0.13% on the day.
Improving investors’ appetite for risk, following upbeat US economic data and amid the Fed’s pessimistic stance, prompts market participants to move toward higher perceived risk assets.
GBP has remained bullish with strong economic data, as the country is preparing for the fourth phase of the reopening on June 21, despite the threat of the Indian variant of covid-19.
Bank of England (BoE) legislator Gertijan Vielghe noted that the central bank could start raising interest rates earlier than expected in 2022 if the economy continues to show signs of recovery.
In the meantime, the European Central Bank (ECB) reiterated its commitment to maintain favorable financing conditions using the full amount of the Pandemic Emergency Purchase Program (PEPP) until at least March 2022. This, in turn, hurt sentiment over the common currency.
On the other hand, the fight for Brexit continues to influence the movement of the crossing. In the latest development, the UK Office for National Statistics (ONS) reported that trade between the UK and the EU fell 23% in the first quarter, compared to 0.8% with the rest of the world.
For now, investors are turning their attention to the release of the German Harmonized CPI Consumer Inflation Index to gauge market sentiment.
EUR / GBP technical levels
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