- The pound erases Thursday’s gains against the euro.
- Risk aversion and falling GBP / USD boosted EUR / GBP.
The EUR / GBP found support above 0.8600 and rose to the 0.8650 zone on Friday, fueled by a climate of risk aversion and a significant decline in GBP / USD. Wall Street futures are recovering but still point to a negative open.
The pound lost steam and is erasing Thursday’s gains against the euro. The stock’s slide, coupled with the support at 0.8600, appears to have slowed the pullback. The short-term trend still has a bearish bias, but if it surpasses 0.8660 this could change and expose the short-term resistance that is at 0.8670.
The presentation of the budget of the UK Secretary Sunak has come under fire for the initiative to raise corporate taxes. This can be a negative factor for the pound. But on the side of the Eurozone, the problems to vaccinate are becoming evident, generating expectations that the economic recovery of that region will be slower.
In the next few hours the US employment report and there is also great expectation for the operation on Friday after the decline on Thursday. The negative climate in the stock markets favors volatility in currencies, which does not exclude the EUR / GBP.
From a technical point of view, to the upside, 0.8670 keeps the euro under control, while in the opposite direction, the support of 0.8600 does the same with the pound. A drop below 0.8600 may trigger new selling, although last week’s lows near 0.8530 seem unlikely to be reached at the moment.
Technical levels
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