- EUR/GBP traded with a mild positive bias through the mid-European session on Thursday.
- The shared currency was supported by the proposed €750 billion EU virus recovery fund.
- Brexit uncertainties, dovish comments by BoE’s Saunders took its toll on the British pound.
- A sustained move beyond the 0.9000 mark is needed to confirm a near-term bullish bias.
The EUR/GBP cross edged higher during the European session and inched back closer to the key 0.9000 psychological mark, or one-month tops set last Thursday.
The shared currency remained well supported by the fact that the European Union (EU) Commission on Wednesday proposed a €750 billion for the coronavirus recovery fund. The pooled relief program includes €500 billion in grants and €250 billion in loans, aimed at helping the worst-hit economies in the region.
On the other hand, the British pound further pressured by some dovish comments by the Bank of England (BoE) policymaker Michael Saunders. Speak about monetary policy, Saunders did not rule out the possibility of negative interest rates and argued that it was less risky to ease the policy too much in the current environment.
This comes on the back of persistent Brexit uncertainties, which took its toll on the sterling and provided a modest lift to the EUR/GBP cross. It is worth recalling that the UK PM spokesman on Wednesday reiterated government's position and said that the Brexit transition period will now be extended beyond December 31.
Despite the supporting factors, the EUR/GBP cross struggled to retake the 0.9000 mark. This makes it prudent to wait for some follow-through buying before positioning for any further near-term appreciating move. Market participants now look forward to the flash version of the German consumer inflation figures for a fresh impetus.
Technical levels to watch