EURGBP Retreat From Two-Month Highs Ahead of Thursday’s ECB Decision
EURGBP continues lower for the second consecutive day as the pair retreat from two-month highs. Bullish momentum surrounds euro after the EU Commission proposal on the recovery fund. The plan includes 250 billion in loans and 500 billion, which would be handed out as grants to the worst affected European countries by the coronavirus crisis. The proposal offered a strong signal for the unity of the EU and boosted the common currency.
ECB Policy Decision on Thursday Will Drive the Pair
Investors await the ECB meeting on Thursday, which comes at an optimistic moment for the common currency, now that member governments are planning for a commonly issued debt, a necessary step towards the fiscal union. However, some economists believe that the EU recovery fund and the purchase of risky assets by ECB will contain sovereign risk for the eurozone.
UK Mortgage Approvals Disappoint
On the economic data front from the UK, the Mortgage Approvals came in at 15.8K below the forecasts of 23.776K in April. The UK Consumer Credit came in at £-7.4B below the expectations of £-4.5B, while the Net Lending to Individuals dropped to £-6.9B from previous £1B. Earlier today reported that the UK Nationwide Housing Prices seasonally adjusted came in at -1.7%, below the forecasts of -1% in May, while the yearly reading registered in at 1.8% below the expectations of 2.8%.
EURGBP is 0.10% lower at 0.8896, making fresh two week lows after yesterday’s sharp drop but without cancelling the positive momentum for the common currency. The technical outlook for EURGBP pair remains positive, and only a move below the 50-day moving average at 0.8828 might cancel the positive trend.
On the downside, the initial support for EURGBP stands at 0.8866 the daily low. A close below 0.8866 might challenge the next support area at 0.8828 the 50-day moving average. More support for the EURGBP might emerge at 0.8751 the low from May 12.
On the contrary, first resistance for EURGBP stands at 0.8916 the daily top. A break above 0.8916 might test the next resistance at 0.9005 the high from yesterday’s trading session. If the pair breaks above, then might challenge the next supply zone at 0.9051 the high from May 29.