- EUR/GBP struggled to capitalize on the intraday move to 0.9100 .
- Dovish ECB expectations & soaring COVID-19 cases in Europe dragged on the Euro.
- Brexit uncertainties weighed on GBP potentially limiting losses for the pair.
EUR/GBP quickly retreated 50 pips or so in the early European session, reaching daily lows at 0.9055.
The pair again struggled to move beyond0.9100 round-figure mark but again failed at higher levels, EUR/GBP now trades in negative territory. Euro weakness could be attributed to fears of a double-dip recession amid resurging coronavirus infections in Europe.
France announced a fresh daily record of new covid cases on Sunday, of 52,000. Separately, Italy imposed partial lockdown measures, until November 24. Spain has approved a state of emergency and announced a national curfew. to stem the spread of the virus outbreak.
The developments prompted speculation that the European Central Bank (ECB)will be forced to extend the Pandemic Emergency Purchase Programme (PEPP) in December. The ECB are also expected to lower its economic projections, added pressure to the common currency, which is a key factor exerting pressure on EUR/GBP .
German Ifo Business Climate Index, which eased to 92.7 in October versus 93.2 in September missed estimates of 93.0 and dragged on the Euro.. The IFO Expectations Index also fell short of expectations and came in at 95.0 for October as compared to the previous month’s 97.4 and 96.5 anticipated.
Downside could remain capped as the GBP bulls hold back from placing any aggressive bets amid ongoing Brexit-related uncertainties. Technically, EUR/GBP has shown some resilience near 100-day EMA, which further warrants some caution before positioning for any further depreciating move.