- EUR / GBP is witnessing strong selling for the second day in a row on Thursday.
- There is a strong rebound in demand for the British pound putting pressure on the cross.
- The euro benefits from the weakness of the USD and could help limit the deepest losses before the ECB.
A sudden spike in demand for the British pound has dragged the EUR / GBP cross to fresh eight-month lows, around the 0.8830 region, during the European session on Thursday. At time of writing, the cross is recovering slightly from that level but remains capped below 0.8850.
Following the modest bounce the day before of around 25 pips, the cross has met with new sales for the second day in a row on Thursday and now appears poised to prolong the bearish move. The relative performance of the British pound versus its European counterpart could be attributed to the rapid vaccination campaign and a gradual decline in COVID-19 cases in the UK.
On the other hand, the common currency has been supported by a weaker tone around the US dollar, although it has lacked a strong following amid the possibility of the extension of the blockades due to the coronavirus in the euro zone. Aside from this, a delay in the launch of the COVID-19 vaccine in Europe has prevented euro bulls from opening aggressive positions ahead of the European Central Bank meeting.
It is planned that The ECB announces its monetary policy decision this Thursday at 12:45 GMT and is expected to leave its monetary policy configuration unchanged. Therefore, the key focus of attention will be on any discontent among policymakers over the high euro exchange rate. The decision will be followed by the post-meeting press conference at 13:30 GMT.
Investors will also closely examine comments from ECB President Christine Lagarde, looking for clues that the central bank may take additional action at the next meeting to halt a further appreciation of the euro. This, in turn, could infuse some volatility and provide a significant boost to the EUR / GBP cross amid the absence of other relevant economic releases.
EUR / GBP technical levels
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