EUR/GBP Outlook More Positive, Further Gains Possible

EUR/GBP price, news and analysis:

  • EUR/GBP has been edging higher over the past week and could continue to strengthen on signs that a damaging vaccine war between the EU and the UK will be avoided.
  • While near-term setbacks will doubtless occur, it could be that negativity has become excessive over extended economic lockdowns in the EU and disruptions to vaccine distribution in the bloc.

EUR/GBP outlook more positive

EUR/GBP has been edging higher over the past few sessions and, although the gains have been minimal, any setbacks could be short-lived. From a recent low at 0.8533 on March 18, the cross has climbed to 0.8624 at the time of writing and looks to have broken decisively above the resistance line of a falling channel in place since December 21 last year.

EUR/GBP Price Chart, Daily Timeframe (August 12, 2020 – March 25, 2021)

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

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 0% 5% 2%
Weekly 1% 20% 8%

Technicals and sentiment aside, the Euro has been hit by fears of extended economic lockdowns in the EU and disruptions to the distribution of coronavirus vaccines. However, German Chancellor Angela Merkel has reversed a decision to close the country over Easter, and apologized, while the EU and the UK have issued a vague joint statement on vaccine cooperation – albeit without offering a plan on how to do so.

In addition, EU leaders are holding a video conference Thursday/Friday to take stock of the pandemic and will likely play down the chances of a vaccine trade war while working on improvements to the region’s vaccination program. Note too that the GfK measure of German consumer confidence, released Thursday, showed a better-than-expected recovery and it is possible there could be news of a similar improvement in the Ifo measure of the business climate in Germany when the institute releases its latest data Friday.

— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex