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Forex Market: EUR/GBP edges lower for a third day ahead of European Commission’s economic recovery fund proposal

EUR/GBP slid for a third straight day on Wednesday, trading in proximity to intraday lows during the early phase of the European session, as market players awaited the European Commission’s detailed proposal for an economic recovery fund later in the day.

Last week Germany and France proposed a EUR 500 billion Recovery Fund, which may offer grants to countries and economic sectors that have experienced the most severe impact from the coronavirus pandemic. The proposal is viewed as one step closer to a fiscal union, but still, it faced opposition from Sweden, Austria, the Netherlands and Denmark, which called for a loans-based approach.

Meanwhile, Sterling was still supported by news of a planned wide-scale reopening of the UK retail sector next month, which Prime Minister Boris Johnson announced earlier this week. However, concerns over little progress being made on Brexit were still present and could cap gains.

As of 6:44 GMT on Wednesday EUR/GBP was inching down 0.01% to trade at 0.8901, after touching an intraday low of 0.8889, a level not far from the low registered a day ago.

In terms of economic calendar, at 7:30 GMT today ECB President Christine Lagarde is expected to participate in online Youth Dialogue for the European Youth Event 2020. No relevant macroeconomic reports are scheduled to be released on Wednesday and focus is likely to shift on data strings expected on Thursday and Friday.

Bond Yield Spread

The spread between 2-year UK and 2-year German bond yields, which reflects the flow of funds in a short term, equaled 63.1 basis points (0.631%) as of 6:15 GMT on Wednesday. It has been the lowest spread since May 21st.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.8908
R1 – 0.8935
R2 – 0.8968
R3 – 0.8995
R4 – 0.9022

S1 – 0.8875
S2 – 0.8848
S3 – 0.8814
S4 – 0.8781 is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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