EUR / GBP returns part of the initial gains and falls back towards the 0.9000 region

• The EUR / GBP gained some traction on Monday in reaction to the new COVID-19 lockdown in the UK.
• Euro bulls refrain from opening aggressive positions due to pessimistic expectations from the ECB.

The crossing EUR/GBP has returned some of its initial gains near the 0.9050 region and has now returned to the lower end of its daily range, around the 0.9010 level.

The crossing has built on its weekly opening bullish gap on the first day of a new week and has reversed the negative movement of the previous day, below the key psychological level of 0.9000, the lowest level since September 8. The recovery has been due exclusively to the relatively lower performance of the British pound against its European counterpart, led for the imposition of new restrictions due to COVID-19 in the UK.

The British Prime Minister, Boris Johnson, announced Saturday a closure until December 2 to curb the alarming rate of increase in new coronavirus cases. Furthermore, a senior cabinet member said on Sunday that the lockdown could be extended, which in turn has been seen as a key factor that has weighed on the British pound and has propelled the EUR / GBP cross higher during the first half of Monday’s trading action.

But nevertheless, Latest optimism about the growing prospects for a soft Brexit, coupled with an upward revision of the UK manufacturing PMI, has helped ease the GBP’s intraday bearish pressure. This, coupled with a softer tone around the common currency, has helped limit the rise of the EUR / GBP cross, which warrants some caution before positioning for any further bullish movement.

The euro has retreated due to concerns about the economic consequences of coronavirus-induced lockdowns in the two largest eurozone economies: Germany and France.. Added to this, the explicit signal from the ECB to further loosen its monetary policy later this year has kept euro bulls on the defensive, limiting strong gains for the EUR / GBP cross.