EUR/GBP records biggest single day gains in six months, Lagarde speech eyed
- EUR/GBP took a breather on Wednesday after posting splendid gains in the previous session.
- Upbeat economic data, ECB cautious approach, Brexit woes on traders’ radar.
- Risk-aversion favors the euro amid China’s Evergrande default risk.
After posting the biggest single day gains of more than 100 points in the past six month on Tuesday, EUR/GBP printed minute gains on Wednesday. The pair confides in a very narrow trade band following the previous session’s rally. At the time of writing, EUR/GBP is trading at 0.8631, up 0.03% for the day.
The shared currency touched the multi-month high at 0.8640 against the British pound amid reduced risk appetite among investors. China’s Evergrande unsolved debt crisis continued to haunt traders. Wall Street closed sharply lower on Tuesday, Nasdaq lost 2.8%, the most since March, Dow Jones declined 1.45% whereas S&P 500 fell 2%.
Meanwhile, the European Central Bank President (ECB) President reaffirmed that the current accommodative policy stance ensures a safe exit from the coronavirus pandemic. The comments gained another vote of confidence after ECB Governing Council member and Bank of France Head Francois Villeroy de Galhau said that the inflation forecast of below 2% in 2023 justifies the current ultra loose monetary policy.
The shared currency gained traction following the ECB member Peter Kazimir and Governor of the Bank of Slovakia comments that the central bank might not increase bond-buying via the APP program. Furthermore, the Gfk Consumer Climate indicator in Germany jumped 0.3% heading into October.
Brexit woes continued to pressurise the sterling prospects. In the latest development four rival unionist parties in Northern Ireland have formed an alliance to fight the Brexit protocol. The move augmented the already negative impact of the higher UK gas prices and rising inflation fears.
As for now, traders are waiting for the Eurozone Consumer Confidence data, ECB’s members' speeches, and the Bank of England (BOE) Consumer Credit to gauge market sentiment data.
EUR/GBP techncial levels