EUR/GBP drops back towards 0.8550 amid sluggish markets
- EUR/GBP reverses the previous day’s recovery moves, refreshes intraday low.
- Virus woes, cautious sentiment ahead of Jackson Hole Symposium recall sellers.
- German IFO data can entertain traders amid light calendar, risk catalysts are important.
EUR/GBP recall bears, down 0.10% intraday to renew daily low near 0.8555 amid Wednesday’s Asian session. In doing so, the cross-currency pair bears the burden of recently worsening virus conditions in the bloc as well as risk-off mood amid a quiet start to the day.
French covid hospitalizations jumped to a two-month high while Germany dropped incidence levels as key COVID-19 yardstick as the virus spreads inside the bloc. Additionally, Italy reports a jump in the daily virus-led deaths to 60 on Tuesday. On the other hand, the UK marks the highest weekly total of the covid-led death numbers and around 30,000 new cases.
Also challenging the Sterling were the Brexit headlines from the UK Express stating that the European Union (EU) wants to stop the UK from joining the 2007 Lugano Convention. On a Brexit positive side, the news mentions, “In order to ease the pressure on British businesses, the Government has extended the deadline to use the UKCA certification until 2023.”
Furthermore, the market’s fears of a negative surprise from the annual Jackson Hole Symposium and worsening virus conditions also underpin the US dollar and weigh on the competitor Euro.
It’s worth noting that upbeat German GDP and broad weakness of the US dollar, amid risk-on mood, favored the EUR/GBP buyers the previous day.
Against this backdrop, the US stock futures struggle for a clear direction after an upbeat Wall Street close. Further, the US 10-year Treasury yields refresh one week top near 1.30% by the press time after rising the most in two weeks the previous day.
Moving on, German IFO numbers for August and covid updates will be the key to follow for fresh directions. However, odds of witnessing inactive markets ahead of the speech from Fed Chairman Jerome Powell at the Jackson Hole can’t be ruled out.
Technical analysis
Failures to cross 100-DMA, around 0.8595, drag EUR/GBP towards 50-DMA and an ascending support line from August 12, respectively around 0.8550 and 0.8545.