- EUR / GBP is moving higher on Tuesday amid some selling around the GBP.
- A modest pickup in demand for the USD weighs on the euro and could limit the rise in the EUR / GBP.
- The market focus remains on Thursday’s upcoming BoE monetary policy meeting.
Intraday selling around the British pound increased at the start of the European session and have pushed the EUR / GBP cross to new daily highs, around the 0.8575-80 region, although it has lacked continuation.
The crossover has once again managed to find decent support and has captured some purchases near the region of 0.8545 on Tuesday. In the absence of a new fundamental trigger, the relative underperformance of the British pound could be attributed to the concerns about the confrontation between the EU and the UK over the Northern Ireland protocol.
In recent developments, Maros Sefcovic, vice president of the European Commission, warned in a speech on Friday that a downward spiral in relations could emerge if Britain continues with unilateral action.
This occurs amid concerns that the UK government’s decision to delay the final phase of easing the lockdown measures until July 19 could hamper the incipient economic recovery. The combination of factors has continued to act as a headwind for the British pound and has helped the EUR / GBP cross to erase a significant part of the previous day’s losses.
On the other hand, the common currency has been weighed down by the appearance of some new purchases around the US dollar. This, along with expectations of an optimistic turn by the Bank of England, could prevent investors from opening aggressive bullish positions around the EUR / GBP cross and have limited any further gains, at least for now.
Therefore, the key focus will remain at the BoE’s next monetary policy meeting on Thursday. Meanwhile, the good price action in both directions in the last week points to indecision in the next directional move. This, in turn, suggests that investors are likely to wait for a new catalyst before positioning themselves for firm direction.
Technical levels to observe
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