- EUR / GBP is struggling to hold onto its modest initial gains at multi-day highs.
- Optimism about the reopening of the UK economy underpins the GBP.
- Euro bulls remain on the defensive after EU economic forecasts.
The crossing EUR / GBP has rapidly retraced around 20 pips from three-day highs touched earlier in the day and has now fallen to the lower end of its daily range. At the time of writing, the cross is trading right above 0.8550, practically unchanged on the day.
The cross has gained some positive traction during the early part of the European session and has built on the strong rally the day before from the 0.8535 region, near two-week lows. The rally, however, has lacked strong follow-up buying and has run out of strength near the 0.8680-85 region amid modest GBP strength.
British Prime Minister Boris Johnson’s announcement on Monday that all restrictive measures would be lifted on July 19 it has continued to act as a tailwind for the British pound. This, in turn, has been seen as a key factor that has limited any significant rally for the EUR / GBP cross and has rather sparked some new selling at higher levels.
On the other hand, the common currency has been seen consolidating the previous day’s losses led by the gloomy ZEW survey, which showed that investor sentiment in the eurozone’s largest economy fell sharply in July. In fact, the German ZEW economic sentiment index fell to 63.3 in the current month from 79.8 in June.
In the meantime, the bulls seem unimpressed by the optimistic economic forecasts of the European Commission. In its latest quarterly economic projections, the commission revised upward growth and inflation estimates for the eurozone for this year due to the reopening of the bloc’s national economies during the second quarter.
There is no major economic data release on Wednesday, neither from the eurozone nor from the UK. That said, the release of the expected June meeting minutes for the EUR / GBP cross.
EUR / GBP technical levels
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