EUR/GBP drops heavily to the 0.9100 region
- EUR/GBP moves sharply lower to the 0.9100 region.
- GBP-strength forces the cross to shed part of recent gains.
- The BoE announced further stimulus on Thursday
The renewed better tone in the sterling is forcing EUR/GBP to abandon the area of 2020 highs near 0.9500 the figure and to refocus on the 0.9100 neighbourhood on Friday.
EUR/GBP weaker on GBP-buying
After reaching levels last seen in January 2009 in levels just shy of the 0.9500 mark on Thursday, EUR/GBP sparked a correction lower to the current 0.9100 neighbourhood on the back of the stark recovery in the quid.
In fact, the British pound collapsed on Thursday on the back of the solid performance of the greenback although it regained traction after the BoE delivered another round of monetary stimulus including an extra 15 bps interest rate cut, an expansion of the asset purchase facility and a larger size of the Term Funding Scheme (aimed to support small firms).
In the meantime, the European cross is now attempting to stabilize following the opening bell in Wall Street and amidst some bounce in the greenback while equities in both Europe and US adding to Thursday’s gains.
In the docket, German Producer Prices contracted more than expected during February, while the Current Account surplus in the euro bloc widened to €34.7 billion during the first month of the year.
EUR/GBP key levels
The cross is losing 2.38% at 0.9086 and a drop below 0.9071 (low Mar.20) would expose 0.9019 (monthly high Oct.10 2019) and finally 0.8749 (200-day SMA). On the upside, the next hurdle aligns at 0.9499 (2020 high Mar.19) seconded by 0.9649 (monthly high January 2009) and then 0.9804 (monthly high December 2008).