- EUR / GBP gains strong positive traction on Tuesday and soars to nearly two-week highs.
- Concerns that job losses will increase after the aid program ends weigh on the GBP.
- Eurozone economic data failed to impress the bulls or give any boost.
The crossing EUR/GBP maintains its strong shopping tone and remains stable near the 0.8525 region, at two-week highs after the macroeconomic data of the eurozone.
Following the price movements in both directions the day before, the EUR / GBP has captured further buying on Tuesday and has built on its recent strong bounce from 0.8450, or the lowest level since February 2020. The relative underperformance of the pound sterling could be attributed to concerns about a possible rise in the UK employment rate when the government aid scheme ends. This, to a greater extent, has offset the mostly upbeat UK labor market report.
In fact, the UK unemployment rate unexpectedly fell to 4.7% during the three months through June from 4.8% previously and has been accompanied by stronger wage growth data for the reported month. Positive readings were overshadowed by disappointment in jobless claims, which showed that the number of people claiming unemployment-related benefits fell -7,800 in July from the previous month’s figure of -114,800.
Meanwhile, data published from the euro area showed that the number of employed increased by 0.5% during the second quarter of 2021. Separately, the second estimate showed that the region’s economy rebounded 2.0%, coinciding with the preliminary reading. This was mostly in line with market expectations and did little to provide any momentum. That said, a modest strength in the US dollar has weighed on the common currency and limited gains from the EUR / GBP cross.
Now it will be interesting to see if the bulls are able to capitalize on their strength or choose to withdraw some benefits, especially after the recent move of almost 100 pips in the last trading session. This, in turn, makes it wise to expect additional bullish appreciation.
EUR / GBP technical levels
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