- EUR / GBP finds fresh selling on Monday and extends the pullback from the 0.8920-25 resistance zone.
- The disappointing results of the German IFO survey do not provide any significant boost to the EUR / GBP.
- Any subsequent decline is more likely to remain limited and could be seen as an opportunity for the bulls.
The crossing EUR/GBP moves lower during the European session on Monday, falling to fresh daily lows around the 0.8875 region in the last hour.
The crossover has seen some selling on the first day of a new trading week and has extended the previous day’s retracement decline from the 0.8920-25 resistance zone. The fall has lacked an obvious fundamental catalyst and is more likely to remain limited, which could be seen as a buying opportunity.
UK macroeconomic data released on Friday added to concerns about a slowdown in economic activity. This has come amid news that the new variant of COVID-19 in the UK is perhaps more deadly than the original strain. This, in turn, could prevent sterling bulls from opening aggressive positions, offering some support to the EUR / GBP cross.
On the other hand, Common currency gains support from last week’s optimistic tone from the European Central Bank (ECB) in the Pandemic Emergency Purchase Program. ECB President Christine Lagarde said on Thursday that the central bank may not need to exhaust the PEPP endowment of 1.85 trillion euros if favorable financing conditions can be maintained.
The euro has found additional support from a weaker tone around the US dollar and has not appeared to be affected by the disappointing results of the German IFO survey. In fact, the general business climate index fell more than expected to 90.1 points in January from 92.2 the previous month. Additionally, IFO’s Expectations Index and Current Assessment Index have also come in below estimates.
Market participants are now looking forward to scheduled speeches from ECB Policymaker James Weidmann and President Christine Lagarde for fresh momentum. Apart from this, the comments of the Governor of the Bank of England, Andrew Bailey, together with the events related to the coronavirus saga could influence the British pound and generate some trading opportunities around the EUR / GBP cross.
EUR / GBP technical levels
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