EUR / GBP recovers to one-week highs and approaches the 0.8550 level

• EUR / GBP is witnessing strong intraday short hedging movement from lows of more than a year.
• News that the EU could hit the vaccination target earlier than expected propels the euro.
• A modest pickup in USD demand weighs on the GBP and supports the positive move in the pair.

The crossing EUR/GBP has captured some aggressive buying during the European session on Tuesday and has jumped to week-long highs near the 0.8550 region in the last hour.

After showing some resistance below the psychological level of 0.8500, the cross has staged a solid recovery from lows of more than a year touched the day before. The common currency’s relative outperformance against the British pound could be attributed to news that the EU may hit its vaccination target much earlier than projected.

Bloomberg, citing an internal memorandum from member states of The EU has reported that Germany, France, Italy and Spain will have sufficient supplies to vaccinate at least 57% of their total population by the end of June. This, coupled with a stronger Eurozone Sentix Investor Confidence Index, which jumped to 13.1 in April, has further benefited the euro.

On the other hand, a modest pickup in demand for the US dollar has caused some selling around the GBP / USD pair. This has been seen as another factor that has contributed to the strong positive intraday movement of the EUR / GBP pair of around 50 pips. However, it remains to be seen whether the bulls can capitalize on the move or will fail near support-turned-resistance at 0.8555-60.

There is no major economic data release on Tuesday. Therefore, developments around the coronavirus saga will play a key role in influencing the EUR / GBP crossover and allow investors to seize some short-term opportunities.

EUR / GBP technical levels