News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • Earnings season begins this week with the arrival of quarterly reports from the country’s largest banks. Can they shrug off losses from the recent Archegos blowup and rally higher or will risk aversion take root? Market update from @PeterHanksFX here: https://t.co/Q0LEH8fHzu https://t.co/ywVQ1KwZ26
  • Traders focus a lot of their energy on spotting the perfect time to enter a trade. While this is important, it is ultimately where traders choose to exit trades that will determine success. Learn about the three types of trading exit strategies here: https://t.co/muYkTNXH7s https://t.co/i70XLrni1w
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/Zl7sfu0OT2
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/QqlZ2dQgVv
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/lvIUu5FHoq
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/bpKdIqGxsn
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/jmcAIW4w5k
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/M9isuvnzqF
  • The British Pound is giving back some of its multi-month gains with some pairs testing notable support despite a positive fundamental backdrop. Get your market update from @nickcawley1 here: https://t.co/6Ct5R0H41F https://t.co/c4rXmMjMrv
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5cVYOn https://t.co/4dhCP5pnxM
EUR/GBP Aims Lower: Q2 Top Trading Opportunities

EUR/GBP Aims Lower: Q2 Top Trading Opportunities

Ilya Spivak, Head Strategist, APAC

EUR/GBP Aims Lower as Eurozone, UK Covid-19 Paths Diverge

Advertisement

In early February, the Euro breached support which had confined its losses against the British Pound back to mid-May 2020. That opened the door for a deep selloff that brought the EUR/GBP exchange rate to levels unseen in over a year. The trend looks likely to continue in the months ahead.

The fundamental backdrop seems to be shaped most acutely by the divergent paths taken by the UK and Eurozone on the Covid-19 pandemic. While the UK was relatively early to launch a spirited vaccination effort and cases of the virus have dropped sharply, the EU dragged its feet. In fact, France, Germany and Italy faced another viral wave in the close of the first quarter.

That has understandably shaped speculation about follow-on monetary policy divergence. The Bank of England seems all but certain to lead the European Central Bank in reining in crisis-inspired easing. Not surprisingly, the EUR/GBP drop has been echoed by a widening bond yield gap in favor of Gilts relative to the benchmark German equivalents, Bunds.

EUR/GBP vs. Germany-UK 10yr Bond Yield Spread

EURGBP, EUR/GBP, Germany-UK 10yr Bond Spread, TradingView

Chart prepared by Ilya Spivak, created with TradingView

In fact, the ECB was already on softer footing than the BOE before the pandemic entered the picture. It pulled lending rates into negative territory and launched various nonstandard easing measures – including QE and TLTRO bank liquidity injections – well before the virus struck. The underlying issues there remain even if Covid management were to radically improve.

The removal of Brexit risk as a headwind for Sterling is likewise helpful. A last-minute deal was struck just as the calendar turned to 2021, untying the BOE’s hands to some extent. The central bank was leery of tightening in the presence of acute political risk. It is now likely to be more responsive as lockdowns ease and economic activity ramps up.

Technically, prices are testing the swing low support at 0.8540 following a brief consolidative pause. Confirming a breach below this barrier looks likely to open the door for the next significant leg in the EUR/GBP decline, with the next major support level to be tested thereafter appearing in the 0.8277-8282 zone.

EUR/GBP Weekly Chart

EURGBP, EUR/GBP, EURGBP Weekly, TradingView

Chart prepared by Ilya Spivak, created with TradingView

Top Trading Opportunities in 2021
Top Trading Opportunities in 2021
Recommended by Ilya Spivak
Get Your Free Top Trading Opportunities Forecast
Get My Guide

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES