- EUR / GBP fell sharply early in the European session.
- Retail sales in Europe increased more than expected in February.
- BoE legislator Silvana Tenreyro is scheduled to deliver a speech.
The pair EUR/GBP made an impressive rally last week and gained more than 150 pips. However, the pair struggled to preserve its bullish momentum on Monday and was last seen shedding 0.25% on the day at 0.8650.
However, in the absence of significant fundamental drivers, the EUR / GBP slide in the first European session looks more like a technical correction than a reversal. Reflecting this sentiment, the latest CFTC data revealed that speculators’ GBP net long positions fell to the lowest level in nine weeks.
While speaking to reporters on Monday, British Prime Minister Boris Johnson’s spokesman noted that significant differences with the European Union persist despite some constructive talks.
Hours earlier, data released by Eurostat showed that retail sales in the euro area expanded by 3% in February. Although this reading beat analysts’ estimate of a 1.5% increase, it was largely ignored by market participants.
Later in the session, Bank of England (BoE) legislator Silvana Tenreyro will deliver a speech.
EUR / GBP outlook
“The EUR / GBP not only maintains a base above the key resistance at 0.8643 / 65, the 23.6% retracement of the December / April decline, second half March highs and 55-day average, but the market closed above 0.8574 on Friday A bullish reversal week has also been set to further bolster a recovery story, “Credit Suisse analysts said.
Analysts further noted that initial support stands at 0.8646 ahead of 0.8578. Below the latter, further losses could be seen towards the 0.8526 / 21 area, where buyers are likely to show interest again.
Technical levels
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