- EUR / GBP is considering a test of the session lows just below the 0.8800 level.
- The weakness of the euro dominated on Tuesday, amid concerns about the lockdown and Italian political instability.
Initially during European trading hours, the EUR/GBP It briefly fell below the 0.8800 level for the first time since May 2020. The pair did not spend long at 0.8700, quickly rebounding towards the 0.8840 mark. However, as the US trading has occurred, the pair has pulled back towards the 0.8800 level and bears will look for a second crack at a break below the 0.8800 level, with their eyes on the next. Key chart support area just south of the 0.8700 level.
Moving on to the fundamentals of the EUR; The single currency couldn’t get much of a positive boost from better-than-expected preliminary GDP figures for the fourth quarter of 2020, which, to be fair, was expected after German, French and Spanish figures already released in recent days. Stronger-than-expected preliminary French inflation figures for January, coming on the heels of equally strong figures from Germany and Spain, failed to attract attention; Inflation is expected to pick up in the coming months due to base effects. Any continued rise in inflation beyond that would pose a headache for the ECB, but that potential headache is still far off and EUR traders don’t seem concerned yet.
Rather than data, the euro appears to have been much more focused amid concerns about the lockdown and constant apprehension regarding the political situation in Italy; In the first, Germany is reported to be in the extent of its state of emergency until June, and in the second, the Italia Viva party (which caused the original government to collapse by withdrawing from the previous coalition) recently said that it has not yet progress has been made. on the formation of a new coalition.
In GBP terms, the news flow has been much smoother; Tensions on the border between Northern Ireland and the Republic of Ireland persist, but do not appear to affect sentiment towards the GBP much. Attention remains focused on the rapid pace of the country’s vaccination efforts; 9.65 million vaccines have been administered, 350,000 more in the day, and the country remains on track to meet its mid-February goal of vaccinating all the most vulnerable.
Technical levels
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