On Tuesday, the EUR/GBP saw some follow-through selling for the third day in a row.
The pound was supported by expectations that COVID-19 limitations in the UK will be eased.
The euro was pulled down by disappointing Eurozone ZEW poll results, which added to the selling tendency.
In response to the poor ZEW survey, the common currency fell across the board, dragging the EUR/GBP cross to one-and-a-half-week lows in the last hour, around the 0.8550-45 zone.
For the third consecutive session on Tuesday, the cross extended last week’s retracement decline from levels above the 0.8600 mark, with some follow-through selling. The downward momentum pushed the EUR/GBP cross through the horizontal support of 0.8565-60, which was supported by a number of factors.
The declaration on Monday by UK Prime Minister Boris Johnson that all restrictive measures would be repealed on July 19 boosted the British pound. Aside from that, a continuous US dollar selling bias boosted the pound, putting pressure on the EUR/GBP cross.
The common currency, on the other hand, has lost some ground as a result of the dismal release of the German ZEW Economic Sentiment Index, which fell to 63.3 in July from 79.8 the previous month. Furthermore, the Eurozone indicator dipped to 61.2 for the current month, missing consensus predictions of 84.4.
The latest data reveals that the nascent Eurozone economic recovery is losing pace, owing to fears about the highly contagious Delta strain of the coronavirus spreading. This, in turn, strengthens the case for the EUR/GBP exchange rate to continue declining./n
