EURGBP: EUR to GBP confronts resistance at 61.8% Fib ahead of PMIs

The EUR to GBP (EURGBP) pair declined slightly as investors started to worry about coronavirus cases in Europe. The pair is down by 0.25% and is trading at 0.9025, which is slightly below the Friday’s high of 0.9070.

Coronavirus cases jump in Germany

The EUR to GBP pair declined as investors grew wary about the rising number of coronavirus cases in Germany, the most powerful country in the European Union. According to officials, the number of cases reported in a northern city of the country rose to more than 1,300 during the weekend.

At the same time, the reproduction rate of the virus jumped above the containment level. The rate roe to 2.88 on Sunday from the previous 1.79. This means that for every 100 people with the disease, a further 288 will get infected. Analysts believe that a rate of below one is desirable to better control the disease. The seven-day average of the factor is 2.03. According to CNBC, authorities have been called to enforce quarantines in several parts of the city.

EURGBP waits for PMI data

From an economic perspective, there is no much going on in Europe today. The only important data in the economic calendar is the monthly report by the German central bank. Also, CBI will release the industrial trends orders numbers. As such, the EURGBP pair may remain in a holding pattern awaiting the flash manufacturing and PMI data. Analysts expect that the data will show that the PMIs improved slightly in May.

Italy fiscal problems rise

In addition to the coronavirus cases in Germany and PMI data, the EUR to GBP pair is also reacting to Italy’s fiscal problems. The embattled country expects the deficit to jump sharply this year. According to Giuseppe Conte, the country’s prime minister, the deficit will likely jump to 10.4% this year. He said that the government was concerned about weak consumer spending and a sharp decline in tourism revenue. The announcement came a few days after EU leaders met to deliberate on the recovery fund.

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EUR to GBP technical outlook

The EUR to GBP pair is trading at 0.9028. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. It is also along the 61.8% Fibonacci retracement level. Most importantly, the price is along its highest point on May 29. Therefore, a break above this resistance will see the pair accelerate its upward trend as bulls target the resistance at 0.9200.

Alternatively, a move below 0.8886 will invalidate this trend. This price is at the intersection of the ascending trendline and the lowest point on June 9. It is also slightly below the 50% retracement and the 50-day EMA.

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