EUR/GBP Slides Through Initial Support as Euro Worries Mount
EUR/GBP News, Price and Analysis:
- German warning on ECB QE program rattles the Euro.
- EUR/GBP remains constrained within a short-term range.
EUR/GBP Nears Short-Term Support
Today’s ruling by the German Constitutional Court that ECB QE was legal came with a caveat that hit the single currency lower. The ruling will now weigh on the Euro over the next three months, leaving Euro-Pairs at risk of falling further, a headache for the ECB who are already fire-fighting the economic damage caused by the coronavirus.
Deutsche Bundesbank President Jens Weidmann also spoke at a virtual meeting about the effects of the coronavirus on the German economy, stressing that the measures already taken would remain in place for a long time and that quick recovery in growth was unlikely. The ECB survey of professional forecasters yesterday showed euro-area growth contracting by 5.5% in 2020.
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The British Pound (GBP) on the other hand has remained stable to marginally better-bid Tuesday, as talk continues to swirl of a gradual unwinding of current lockdown conditions being announced later this week, following similar announcements in Europe.
EUR/GBP has traded in a two-point range over the last five weeks with little in the way of news to break either boundary. This may change now with EUR/GBP currently pressing down on channel support after having broken below both the 61.8% Fibonacci retracement level at 0.8747 and the 20-dma at 0.8736 earlier in the session. A break below 0.8678 and last Thursday’s 0.8670 would expose the 200-dma at 0.8653. Monday’s high print at 0.8815 should now cap any short-term upside. A break above re-opens the recent double-highs around 0.8865.
EUR/GBP Daily Price Chart (October 2019 – May 5, 2020)
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