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Market Analysis – EURGBP

The EURGBP opened at a lower market gap this morning, however, has seen an increase in value slightly. Overall, the price still remains lower than the market close of Friday, even though today’s candlestick currently indicates confirmed movement so far. Today would be the Euro’s fifth bullish day if the growth maintains momentum, though even with four consecutive bullish days, the price has generally remained low and struggled to build strong high momentum. Even with the bullish candlestick, traders still need to keep in mind the movement over the last two hours has been in favour of the Pound. Traders are looking to see if the currency will be able to see higher levels of volatility and strength of trends during this week, which is due to see a more active economical calendar for regional states. 

Looking at Friday’s price movements, we can see the currency strengthened against its main competitors including the US Dollar, Swiss Franc and Yen. Looking at the Euro Currency Index this morning, we can see the currency is overall seeing a slight decline in the market. Even though the Pound has not yet formed a bearish candlestick against the Euro, we can see the currency is strengthening other major competitors including the Dollar, Franc and Australian Dollar. 

Due to a lack of significant economic releases, the Euro movement is driven by external factors as well as internal. It is worth noting positive news regarding the coronavirus pandemic. Infection rates in Germany, the Eurozone’s economic powerhouse, continue to decline. Over the past seven days, the number of infected per 100,000 people fell below the key level of 100 and reached 96.5. If this indicator continues to fall, or remains stable below 100, then the economic constraints may be eased. On Tuesday, several German federal states, including Berlin, announced plans to ease restrictions in the coming days. German Health Minister, Jens Spahn, said outdoor events could be allowed. The Italian authorities said they would lift quarantine restrictions for travelers arriving from Europe and the Schengen area starting Sunday, but they will have to take a coronavirus test. This relaxation should it last in the longer term, may support the Italian tourism sector.

As we previously mentioned, in general, the Pound is strengthening, but the latest events in the country are causing concern for investors. The standoff between the UK and France is intensifying, which has already led to the stagnation of the ratification of the deal on the provision of financial services between the Eurozone and the UK. London believes the UK financial services sector will not gain access to European Union markets for the foreseeable future. Meanwhile, the incidence of coronavirus in the UK has started to rise again due to the spread of the Indian strain of the disease. Prime Minister, Boris Johnson, said this threatens plans to further open the economy. Moreover, the country’s Ministry of Health did not rule out the re-introduction of economic and social restrictions at the regional level, if the situation requires so.

In further reports from the UK, according to the Chartered Institute of Personnel and Development and the recruitment firm Adecco, employers plan to hire at the fastest rate in eight years, led by the reopening of the hospitality and retail sectors as pandemic restrictions are relaxed in England and Wales on Monday. However, in a sign of growing pressures in the job market amid rapid growth in consumer spending, the professional body for HR and people development said there had been a sharp decline in the numbers of EU workers, fueling the risk of labour shortages if the government does not make the market more attractive and feasible for European citizens. 

Throughout the week, the market will be looking mainly to Friday where the European States, as well as the UK, will release their PMI Reports relating to Manufacturing and Services. Both reports are measured to be high volatility and price driving events. In addition to the above, the European Central Bank is also due to release on Wednesday their Financial Stability Report, followed by a press conference on Thursday.





Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing investing advice or a recommendation, or an offer of or solicitation for any transactions in financial instruments or a guarantee or a prediction of future performance. Past performance is not a guarantee of or prediction of future performance.
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