EUR/GBP Losses Possible After Resistance Holds

GBP price, news and analysis:

• EUR/GBP has moved higher for the past two days but is beginning to slide back in early European business Thursday and that move lower will likely continue.
• The cross has failed to rise above a congestion area on the charts dating back to the first few days of March and that suggests at least some of this week’s advance will be retraced.

EUR/GBP set to slide lower

EUR/GBP has been rising this week in a counter-trend move that could well be over already. As the chart below shows, the cross advanced this week from Monday’s low at 0.8472 to a high Wednesday at 0.8663. However, Thursday has seen minor losses so far, suggesting the advance has already run out of steam.

Wednesday’s peak was just under the high at 0.8668 dating back to March 3 and, significantly, the price has failed to break above the congested area highlighted by the oval shape on the following chart. There is therefore a possibility of a slide right back to the Monday low. If this proves wrong, then any renewed climb will likely be halted by the February 26 high at 0.8731.

EUR/GBP Price Chart, Two-Hour Timeframe (February 25 – April 8, 2021)

Source: IG (You can click on it for a larger image)

The latest moves in EUR/GBP have come despite a lack of news to account for them. Both the EU and the UK medicines regulators said Wednesday that the benefits of having the AstraZeneca Covid-19 vaccine outweigh the risks, so there was little there to move the cross.

The EU is still seen to be lagging behind the UK in vaccinating its citizens, arguably meaning the economic recovery in the bloc will be weaker than in the UK. Note though that German factory orders rose in February by 1.2% month/month, up from the previous 0.8%.

— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex