- EUR / GBP registers a modest rebound from the 0.8700 level, at multi-month lows.
- The common currency gets a little boost after the release of the optimistic ZEW survey results.
- Optimism about the rapid vaccination in the UK could continue to prop up the British pound and limit the rise in the pair.
A modest rebound in demand for the common currency has pushed the crossing EUR/GBP to new daily highs around the 0.8730-35 region in the last hour.
The crossing has experienced a modest rebound from near the round level of 0.8700 and for now appears to have halted its recent decline to the lowest level since May 2020. The relative superior performance of the common currency versus its British counterpart could be attributed to the optimism of the ZEW survey results posted on Tuesday.
In fact, the ZEW German Economic Sentiment Index improved to 71.2 points in February compared to estimates that pointed to a modest drop to 59.5 points from 61.8 the previous month. Added to this, ZEW economic sentiment for the euro zone also beat market expectations of 57.0 points and jumped to 69.6 from 58.3 in January.
On the other hand, Sterling is consolidating its recent strong gains to multi-year highs against the USD and it has not influenced the EUR / GBP cross much. That said, the pair’s rise appears limited amid optimism that rapid vaccination for COVID-19 in the UK would lead to a faster economic recovery than other European countries.
It is worth reporting that the British government reached the milestone of vaccinate 15 million of its most vulnerable people, or a quarter of its population, on February 15. This should allow UK Prime Minister Boris Johnson to lift the strict lockdown restrictions sooner rather than later.
Even from a technical perspective, the formation of a downtrend channel supports prospects for additional weakness. This makes it prudent to wait for strong continuation buying before confirming that the EUR / GBP may have bottomed out in the near term and positioned for a significant recovery.
EUR / GBP technical levels
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