- EUR / GBP has quickly recovered intraday losses to the lowest level since February 2020.
- A combination of factors limits the British pound and offers some support to the cross.
- The market’s focus remains on the Bank of England’s upcoming monetary policy meeting on Thursday.
The crossing EUR/GBP has reversed an initial drop in the European session to new multi-month lows and remains in neutral territory, around the region of 0.8565-70.
After a brief consolidation during the first half of trading action on Wednesday, the cross has been witnessed some sales and has fallen to the lowest level since February 2020, around the region of 0.8540.
The common currency has been under pressure amid concerns that the temporary suspension of the vaccine for COVID-19 could hamper the already fragile economic recovery of the euro zone.
On the other hand, a combination of factors has limited any significant rally for the British pound and has helped limit the deeper losses for the EUR / GBP cross. The fact that the European Union took legal action against the United Kingdom for violating the Northern Ireland protocol it has prevented the GBP bulls from opening aggressive positions and has offered some support to the EUR / GBP cross.
The pound sterling has been further affected by the The previous day’s cautious comments from Bank of England Governor Andrew Bailey on the economic recovery. Bailey also added that the central bank is committed to buying bonds at a high rate. This was seen as an early sign for a possible downward revision of the Bank of England’s economic forecast at the next meeting on Thursday.
Meanwhile, the EUR / GBP cross has now rallied around 30 pips from intraday lows. That said, the sharp pullback the day before from the week-and-a-half highs points to persistent selling interest at higher levels. So any significant rally still looks elusive, warranting some caution for aggressive bulls ahead of the central bank risk event.
EUR / GBP technical levels
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