- EUR / GBP joined the strong overnight gains and was up for the middle of the European session.
- The problems of Brexit, the nervousness of COVID-19 weighed heavily on the British pound and continued to support the measure.
- The stronger USD put pressure on the shared currency and limited gains, at least for now.
The crossing EUR/GBP it continued to rise through the middle of the European session and spiked to nearly two-month highs around the 0.8670 region in the last hour.
The cross built on the previous day’s bullish breakout momentum via the 100-day SMA and gained strong follow-up traction on Tuesday amid the strongly offered tone surrounding the British pound. The deadlock over the Northern Ireland Protocol to the Brexit deal has soured ties between the UK and the European Union in recent months. This, coupled with the resurgence of COVID-19 infections in the UK, acted as a headwind for the British pound and provided a strong boost to the EUR / GBP cross.
In the latest developments, speaking at a parliamentary committee on Monday afternoon, UK Brexit chief negotiator David Frost said the protocol is not sustainable in its current form and all options remain on the table to resolve. the problem. Lord Frost further added that the government will present its proposals for post-Brexit deals for Northern Ireland on Wednesday. This could eventually have far-reaching consequences for Britain’s relationship with the EU.
Meanwhile, COVID-19 cases are increasing by more than 50,000 a day in the UK and hundreds of thousands of Britons are being asked to self-isolate for 10 days. In fact, UK Health Minister Sajid Javid tested positive for COVID-19 and was in self-isolation. This also forced Prime Minister Boris Johnson and Finance Minister Rishi Sunak into quarantine. This, to a greater extent, overshadowed the UK government’s decision to lift most of the COVID-19 restrictions on July 19.
On the other hand, the shared currency fell to three-and-a-half-month lows against its US counterpart, the US dollar. This, in turn, could prevent bullish traders from placing aggressive bets around the EUR / GBP cross and control any further gains, at least for the time being. That said, the technical indicators on the daily chart maintained their bullish bias and are still far from being in overbought territory, supporting the prospects for additional gains.