- EUR / GBP gains some positive traction on Monday and breaks a three-day losing streak.
- The continued rise in COVID-19 cases in the UK prevents GBP bulls from opening aggressive new positions.
- The common currency benefits from the prevailing selling bias of the USD and supports the upward movement of the EUR / GBP.
The crossing EUR/GBP extends its recovery gains during Monday’s European session and rises towards the region of 0.8990.
As investors looked beyond the optimism of the Brexit trade deal, the cross has opened with a modest bullish gap on the first trading day of 2021 and, for now, appears to have halted its recent decline to one-month lows. The fact that The Brexit deal will not apply to the UK services sector, which accounts for 80% of the UK economy, has prevented sterling bulls from opening new positions.
The pound sterling has been further affected by a unprecedented level of COVID-19 infections in the UK. British Prime Minister Boris Johnson warned Sunday that stricter restrictions are likely to be imposed to curb the continued rise in new cases. This has been seen as another factor behind the sterling’s relatively underperformance against its European counterpart.
On the other hand, common currency continues to benefit from prevailing bearish sentiment around the US dollar. This, in turn, has helped the EUR / GBP cross gain some positive traction on Monday and break three consecutive days of losing streak. That said, the rally lacks a strong following and warrants some caution for investors.
EUR / GBP technical levels
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