- EUR/GBP advances for the second day in a row and extends the previous day’s bounce from below the 0.8300 level.
- The better relative performance of the common currency could be attributed to a better than expected German PMI.
- A dovish assessment of the BoE decision last week keeps GBP bulls on the defensive.
The crossing EUR/GBP moves higher during the early part of the European session on Thursday and rises to a two-day high close to the 0.8350 level.
The cross attracted some buying near the 0.8315 area on Thursday and turned positive for the second day in a row, with the bulls now looking to build on the previous day’s bounce from below the 0.8300 level. The last climb came after German PMI release better than expected. The preliminary report showed that business activity in Germany’s manufacturing and service sectors continued to expand in Marchalthough at a slower pace than that recorded in the previous month.
In fact, Markit manufacturing PMI lowered to 57.6 vs. market expectations for a drop to 55.8 from the 58.4 seen in February. What’s more, the indicator for the services sector fell from 55.8 in the previous month to 55 in March, although it was better than estimates that pointed to a reading of 53.8. This, in turn, was seen as a key factor behind the common currency’s relative performance against its British counterpart and pushed the EUR/GBP cross higher.
On the other hand, Sterling was hit by a dovish assessment of the Bank of England’s policy decision last week. It is worth remembering that the UK central bank softened its language around the need for future rate hikes. This was seen as another factor that extended some support to the EUR/GBP cross. That said, concerns that the European economy would suffer the most from contagion effects from the Ukraine crisis could limit gains for the EUR/GBP cross.
Therefore, the market will focus on new developments around the war between Russia and Ukraine. US President Joe Biden will meet with NATO and European leaders in an emergency summit on the Ukraine war. Given its geographical proximity, incoming news will influence sentiment around the Euro and give the EUR/GBP cross some momentum.
EUR/GBP technical levels
Source: Fx Street
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