- EUR/GBP sold off again for the second day Thursday.
- Strong pound (GBP) demand exerted pressure on the pair
- The euro (EUR) benefitted from a weaker USD which could limit losses ahead of the ECB.
A jump in demand for the British pound pulled EUR/GBP to an eight-month lows, at 0.8830 in early European trade.
The pair declined for a second consecutive session on Thursday and could extend losses.. The Pound’s outperformance versus the Euro could be attributed to the rapid vaccination campaign in the UK and a gradual decrease in COVID-19 cases in the UK.
Meanwhile a weaker tone surrounding the US dollar underpinned the Euro, although it lacked follow through. A delay in the rollout of COVID-19 vaccine in Europe added pressure to the euro ahead of the European Central Bank meeting.
The ECB is due to announce its monetary policy decision later this Thursday at 12:45 GMT. The central bank is widely expected to leave its monetary policy unchanged. Instead the focus will be on any comment over the high exchange rate of the euro.
ECB President Christine Lagarde’s comments will be closely scrutinized for clues that the central bank may take measures to curb further appreciation of the euro. could fuel volatility and provide some trading opportunities.