- EUR / GBP has fallen below 0.8700 for the first time since May 2020 in recent trading.
- The pair is hit again by the strong performance of the GBP amid ongoing vaccination / reopening optimism.
The EUR/GBP it has been under selling pressure in recent trades, likely as a result of increased trading volumes. The pair has managed to break below the 0.8700 level for the first time since May 2020, a large reversal of the previous session’s highs closer to the 0.8740 mark established before the start of US trading.
Driving the day
Continued optimism regarding the state of the UK vaccination efforts and prospects that the country may soon ease the lockdown continues to support the GBP, making it near the top of the G10 performance chart for second day in a row this Tuesday.
The GBP outperforms the euro for this very reason (and the fact that the launch of vaccines in the EU has been comparatively slow). But the euro does not perform badly on the day. In fact, although it is lower against the GBP, it is flat against the USD, NZD and AUD and stronger against the CHF, JPY and CAD.
Some positive factors could be supporting the euro on Tuesday (or, at the very least, discouraging bears from selling). First, the data has been robust; Germany’s main ZEW economic sentiment index rose to 71.2 in February, well above expectations for a drop to 59.6 from 61.8. Furthermore, ILO data released before the start of the European session showed that the French unemployment rate fell to 8.0% in the fourth quarter from 9.0% the previous quarter, a massive blow to expectations that the rate unemployment remains unchanged at 9.0%.
Meanwhile, the second estimate of Eurozone GDP growth in the fourth quarter of 2020 was slightly stronger than expected, with the annual growth rate revised to -5.0% and the quarter-on-quarter growth rate revised to -0.6%. . Elsewhere, Italy is receiving strong interest from investors in its next round of debt issuance, a phenomenon that market commentators attribute to market optimism about the arrival of former ECB President Mario Draghi as Prime Minister of the country.
Technical Levels
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