EUR / GBP is trading upside at 0.8650 as sterling struggles continue

• EUR / GBP continues to trade on a positive bias just below the month-long highs of 0.8650.
• The poor performance of the British pound comes despite reports that the UK will pass the Covid-19 herd immunity threshold next Monday.

The EUR/GBP it continues to trade with a positive bias just below the one-month highs at 0.8650, having recovered from the previous session’s lows at 0.8620. The pair is currently trading with gains of around 10 pips or around 0.1% on the day and continues to swing on both sides of its 50-day moving average at 0.8643.

Performance of the day

Although not the worst performing G10 currency on the day (that krone goes to the USD, with the CAD a close second from below), the GBP is not having a great session. This underperformance comes despite reports in the UK press that the country will pass the Covid-19 herd immunity threshold by next Monday, as well as strong data from the UK in the form of a PMI reading of construction much higher than expected for the month of March (which reached 61.7 compared to the 54.6 forecast) and a figure from the RICS Housing Survey index much higher than expected (which reached 59.0 compared to the forecast of 55.0).

In terms of the euro, although the single currency is outperforming the British pound, it is otherwise not having a particularly good session and is down against NZD, JPY, CHF and AUD. Euro traders have had to be content with a large dose of comments from the ECB, as well as the publication of the minutes of the March meeting of the ECB; As expected, the tone of the minutes was very moderate, and ECB members agreed that it is important to provide assurance that the governing council will maintain highly accommodative monetary policy conditions for as long as necessary and does not see any risk of overheating.

Meanwhile, ECB President Christine Lagarde noted that the pandemic and related containment measures will continue to have a negative impact on economic activity in the euro zone in the short term, but that activity should pick up later in the year. The ECB’s chief economist, Philip Lane, reiterated that favorable financial conditions should be maintained. The ECB’s Klass Knot said he expects the pace of asset purchases under the PEPP to slow down by June.

In other relevant news from the euro zone, French Prime Minister Castex noted that more than 10 million people have received their first Covid-19 vaccine, a week ahead of schedule. Other commodity news regarding the bloc’s so far slow launch of vaccines may give the euro a boost.

Technical levels