EUR/GBP smashes intraday highs, putting Monday’s retracement moves to the test.
The EU is softening its stance on Brexit, and the UK and Germany are discussing British visitors’ admission into Europe.
German inflation may support the ECB’s Holzmann on inflation expectations, but Lagarde’s remarks will be crucial.
During Tuesday’s Asian session, the EUR/GBP gains up bids to refresh intraday highs at 0.8595, up 0.05 percent. The previous day, the cross-currency pair snapped a two-day upswing before bouncing off 0.8566.
In recent weeks, mixed fears about the UK appear to have aided EUR/GBP buyers. Among them, the coronavirus (COVID-19) outbreak in the United Kingdom could be a major catalyst. According to the most recent official numbers for Monday, the UK saw its highest daily infection rate since January 30, with 22,868 cases added to the total of 4,755,078 cases. Despite this, the UK remains optimistic that major activity limits will be lifted in July, according to Sajid Javid, the newly appointed Health Minister.
In other news, the European Union (EU) recently demonstrated its willingness to end the sausage war by saying, according to the BBC, that he is “confident” a solution can be found in the next 48 hours over a possible ban on chilled meat products from the United Kingdom being sold in Northern Ireland. It’s worth noting that Jersey’s extension of the transitional period for French fishing rights also avoids the immediate Brexit fight.
At home, ECB policymaker Robert Holzmann stated that low inflation leaves no room for rate hikes, and that the PEPP will be phased out after the coronavirus crisis is over. According to Reuters, Jens Weidmann, a member of the European Central Bank’s (ECB) Governing Council and the President of the Bundesbank, stated on Monday that he’d like to debate the conditions under which the emergency ends from a policy standpoint.
EUR/GBP may remain shelved ahead of Germany’s Harmonized Index of Consumer Prices (HICP) and a speech from ECB President Christine Lagarde due to contradictory signals and pre-data caution on a light calendar day. While the ECB’s Lagarde may keep purchasers encouraged with her economic optimism, dismal forecasts for German inflation data may back fears of no monetary policy tweaks and weigh on the quotation.
EUR/GBP bulls are eyeing the monthly resistance line near the 0.8600 level unless the pair falls below three-week-old horizontal support around 0.8565-60.
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