EUR / GBP stuck within a range ahead of the week’s key events

• EUR / GBP has been swinging on Monday, but continues to trade within last week’s 0.8550-0.8600 range.
• All eyes will be on this week’s Bank of England rate decision and comments from ECB officials, which will take place on Thursday.

The EUR/GBP It fell to lows below 0.8560 at the start of the European session, but has now returned to 0.8585. With the pair recovering quite a bit from lows, the bulls will look for a test of last week’s high just below 0.8600. Currently, the pair is trading modestly higher, up about 0.1% or just over 10 pips, but remains stuck within last week’s 0.8550-0.8600ish ranges.

EU / UK news update

Although the price action has been fairly subdued, and the EUR / GBP continues to trade well within recent ranges, there are some notable stories outside of the Eurozone and the UK that relate to current issues that have been driving the pair. Starting with the UK; The UK press reported over the weekend how the UK appears to be able to offer every adult in the country their first vaccine by June 10, ahead of the government’s current target for late July.

Meanwhile, the same research firm that calculated the aforementioned forecast that all UK adults were offered their first vaccination is estimating that all adults in the Eurozone will be offered their first vaccines by the end of August. , almost two months later (although this is significantly earlier than previous estimates). The UK retains its comparatively advantageous position with regard to vaccine launch and economic reopening possibilities during the summer.

Elsewhere, Bank of England Governor Andrew Bailey made some unexpected remarks today (it is unusual for the Governor to speak so close to a rate decision) and sounded quite optimistic about the outlook for the UK economy, while it downplayed fears that inflation might pick up. well beyond the bank’s 2% target. Bailey has therefore set an optimistic tone ahead of this week’s Bank of England rate decision, which is now expected to reflect a more optimistic outlook and could well be supportive for the British pound.

Finally, there are some noteworthy stories about the bitter relations between the EU and the UK; UK press reported over the weekend that the EU and UK are in “disagreement” on post-Brexit fishing rights (nothing new there) and the EU has officially launched legal action over modifications the government The United Kingdom made its trade agreements with Northern Ireland. Disputes between the two parties are not likely to attract much attention from the financial market unless the threat of tariffs / some kind of trade war is brought to the table, in which case the GBP is likely to be hit the hardest given the size. smallest of the UK economy compared to the eurozone.

Moving on to the news from the euro zone; The news about pandemics is still much worse than in the UK. German ICU doctors are reportedly calling on the government to put the country back into a partial lockdown as hospitalizations continue to rise. Meanwhile, concerns remain about the AstraZeneca vaccine being linked to blood clots and several euro zone nations have halted the launch of the vaccine. Italian authorities reportedly seized all doses from a recent batch of AstraZeneca vaccine deliveries after a person died after receiving the vaccine and news recently emerged in Germany that the country will immediately stop administering the vaccine. .

On the other hand, the ECB’s weekly asset purchase data was released recently and showed that the bank’s asset purchases rose modestly to € 14 trillion last week from below € 12 trillion the previous week. As a reminder, the ECB noted last week that the pace of purchases would increase dramatically over the next quarter, and sources later suggested that this could mean that the monthly rate of purchases could go from € 60 billion in February to € 100 billion. euros. In that case, Monday’s purchase figures are disappointingly low, although ECB President Christine Lagarde warned at last week’s press conference that they would be low given the unusually high redemptions. Focus on the data for the next week. Markets will expect net purchases of at least € 20 billion.

Looking at the rest of the week; Euro traders will be watching for comments from several key ECB officials on Thursday, while the main event for GBP traders will be Thursday’s Bank of England rate decision.

Technical levels