- EUR/GBP met support in the mid-0.9000s.
- German Business Climate dropped to 86.1 in March.
- UK CPI rose 0.4% MoM and 1.7% YoY in February.
The continuation of the buying interest in the sterling keeps the downside pressure well and sound around EUR/GBP, forcing it to drop as low as the 0.9050 region.
EUR/GBP drops to 3-day lows
EUR/GBP is down for the second session in a row on Wednesday, briefly testing the mid-0.9000s earlier in the session, or 3-day lows, just to rebound and regain the 0.9100 mark soon afterwards.
In the meantime, the rally in the British pound remains well and sound and keeps recovering ground lost, particularly vs. the greenback after last week’s “flash crash”. Indeed, further strength in the quid came after the recently announced extra stimulus by the Federal Reserve and the subsequent impact on the buck.
In the docket, German Business Climate measured by the IFO indicator dropped more than estimated for the current month along with the Business Expectations and Current Assessment components. In the UK, inflation figures tracked by the CPI showed consumer prices rose 0.4% inter-month in February, reversing the previous contraction, and gained 1.7% from a year earlier.
What to look for around GBP
The British Pound keeps correcting higher so far this week, bouncing off levels last seen in times of the Plaza Accord in 1985 vs. the greenback and multi-month lows vs. the euro. The extra stimulus from the Fed is lending oxygen to both currencies at the moment, although they’re not out of the woods yet. In addition, GBP is expected to remain under the microscope in light of the upcoming EU-UK trade negotiations to kick in later this year, while shaky UK fundamentals plus the impact of the coronavirus on the domestic and global economy open the door to the palpable possibility that the country could slip into recession in the near future.
EUR/GBP key levels
The cross is losing 0.30% at 0.9143 and a drop below 0.9054 (weekly low Mar.25) would expose 0.8994 (low Mar.20) and then 0.8896 (21-day SMA). On the flip side, the next resistance lines up at 0.9499 (2020 high Mar.19) seconded by 0.9649 (monthly high January 2009) and then 0.9804 (monthly high December 2008).