EURGBP: EUR to GBP turns lower as divisions between north and south rise

The EUR to GBP (EURGBP) declined slightly ahead of the important statements by Ursula von der Leyen and Christine Lagarde.

Ursula von der Leyen statement

Ursula is the president of the European Council. Today, she will address the EU commissioners on the next phase of funding that is required for the bloc. Her statement comes at a time when divisions between the north and the south are continuing.

On the other hand, the southern countries like Spain and Italy have called for a 1.5 trillion-euro financing program for the region. They also demand that the funds be in form of grants.

Northern states like Denmark, Austria, and Netherlands have rejected such a proposal. Instead, they advocate for financing to be provided in form of low-interest loans.

Two weeks ago, Angela Merkel and Emmanuel Macron agreed to a financing agreement worth about 500 billion euros. The funds will be raised by the European Commission and be given to poorer and most-affected countries in form of grants.

According to the Financial Times, sources in Brussels say that the commission will promote new taxes to fund this recovery. For example, the carbon market is expected to raise about 10 billion euro. They also hope to increase taxes from carbon-heavy industries.

Meanwhile, the EURGBP pair is reacting to the simmering crisis in the United Kingdom. The problem is that Dominic Cummings, a minister who helped draft the lockdown proposals broke the rules himself. This has put Boris Johnson in a tough position even as unrest increases in his party.

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EURGBP technical outlook

The EUR to GBP pair is trading at 0.8897, which is lower than Thursday’s high of 0.9000. On the daily chart, the price is along the 50% Fibonacci retracement level and is above the 50-day and 100-day exponential moving averages. The pair is also in the second corrective wave of the Elliot Wave formation. This means that the price will decline slightly before continuing the upward trend.

On the other hand, a move below the 38.2% retracement level of 0.8750 will invalidate this trend. This price is also along the 100-day exponential moving average.

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