- EUR / GBP is testing this week’s multi-month lows around the 0.8510 area.
- French President Macron, speaking at 19:00 BST, may tighten the restrictions again by implementing a new national blockade.
The EUR/GBP it is testing this week’s multi-month lows around the 0.8510 area. The pair has fallen a modest 10 pips or around 0.15% from the levels touched in the Asian session at 0.8520-35, a decent reversal from Tuesday’s session highs above 0.8550. A break below support in the form of a psychologically important 0.8500 level would open the door to an extension of the technically driven selling amid the lack of any key support level down to the 0.8300 level.
Performance of the day
The main news to watch out for on Wednesday is that France may be about to tighten lockdown restrictions again by implementing a new national lockdown that could include closing schools for four weeks (one week of remote learning and three weeks vacation). French President Emmanuel Macron will give a speech at 19:00 BST, where he will announce the new measures and the French Parliament will vote on the blocking rules on Thursday (and is expected to vote in favor of them).
The news is not particularly surprising given that Covid-19 cases continue to trend upward in France and amid ongoing concerns in various regions that hospitals may be overwhelmed. It is worth noting that France (and the rest of the EU) did not experience as large an increase in Covid-19 infections in Q4 2020 and early Q1 2021 as the UK because, at that time , the United Kingdom was being affected by the much more virulent (up to 70% transmissible) variant B.1.1.7, which was first found in Kent. However, this variant has now become dominant on the continent and is sadly driving the third wave of infections there.
Eurozone countries face an uphill battle in the coming weeks to keep infections as low as possible, in hopes that the vaccine will gain immunity and better weather as the northern hemisphere enters summer will cause cases. are reduced again. The hope is that the death rate from the virus will be lower over the course of this next wave of infections, given that the EU has now been able to vaccinate a decent percentage of its population over 80 years old.
Signs that the EU is getting the virus under control again and starting to open up will eventually help the euro against rates such as GBP and USD, two currencies against which the euro has suffered greatly in recent months. But this still appears to be a week away, which means that euro pairs like the EUR / GBP are likely to have a hard time catching an offer anytime soon.
Technical levels
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