EURGBP trades lower for second straight day approaching the critical support at the 100- day moving average as investors follow the Chancellor Rishi Sunak’s mini-budget. Rishi Sunak is expected to announce a £2bn temporary job scheme for under-25s, a stamp duty holiday, a £3bn green investment package and a temporary VAT reduction. British pound boosted yesterday by news that Brexit negotiator David Frost met with Michel Barnier of informal Brexit talks.
Euro failed to capitalize the better than expected economic data from the manufacturing and services sector In Europe and stalled at the 91 mark.
ECB’s package of asset purchases up to €1.35tn has improved sentiment, dragged borrowing costs lower and making investors more confident about holding the debt of weaker southern countries.
ECB President Christine Lagarde said that GDP is expected to fall by -8.7% in 2020 (revised down by -9.5% from March projections), then rebound by 5.2% in 2021 (revised up by 3.9%) and 3.3% in 2022.
Lagarde has opened the door in using its €2.8 trillion asset purchase programme to achieve the green objectives. Christine Lagarde has committed to examine greener changes to all of the central bank’s operations, including the asset purchases. ECB the first leading central bank to use a flagship bond-buying programme to pursue green objectives.
The governor of the BOE, Andrew Bailey, said in early July it would look at include climate change considerations as a factor in the corporate bond purchases after the COVID-19 crisis was over.
EURGBP Daily Technical Analysis
EURGBP is 0.03% lower at 0.8996, as the pair looking for a direction below the 0.90 mark today. The recent correction from June highs continues, but the bears look tired below the 0.90 mark. The technical picture for EURGBP is clearly bullish despite the recent correction. A break below the 50 days moving average at 0.8933 would cancel the positive momentum for the pair.
On the downside, the first support for EURGBP stands at 0.8974 the daily low. A close below 0.8974 might challenge the next support area at 0.8933 the 50-day moving average. More support for the pair would emerge at 0.8862 the low from June 9.
On the contrary, initial resistance for EURGBP pair stands at 0.9009 the daily high. A break above 0.9009 might test the next hurdle at 0.9054 the high from yesterday’s trading session. If the EURGBP moves higher, then might challenge the next supply zone at 0.9142 the high from June 30.
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EURGBP Daily Chart
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