EURGBP Rescued After New Lows for the Year

The EURGBP exchange rate registered a new low for the year near the 0.8500 level, but buyers emerged to see a close above recent support levels. The move in the pair could be a low for the Euro but we will need some further evidence of that this week.

EURGBP is flat in early trading on Tuesday but the market is awaiting German inflation figures. The single currency has had little to cheer lately and will need to see something change for further buyers to emerge.

Policymakers Worried About EU Recovery

Policymakers are concerned that the EU plan to drive an economic recovery may not be enough.

The Eurozone has fallen behind the UK and US in its vaccination rollout and it is sure to lag those countries in economic growth this year as the OECD said recently. Falling too far behind this year could also constrain growth in subsequent years due to the lack of wiggle room in finances.

Leaders such as French President Emmanuel Macron have called for a “vigorous response” on top of the historic €750 billion stimulus that has been ploughed into the economy.

The German Constitutional Court, which is the highest in the country, threw a spanner in the works on Friday by halting its approval of the recovery fund after it saw last-minute legal challenges. The EU will hope that it is a temporary delay, but it highlights once again, the complexity of operating in the EU. The bloc’s vaccine rollout has been hit with countless delays and arguments, while it was also halted over the blood clot issue.

The euro needs to see something change for investors to find confidence in the currency again and a bounce from the current lows may only be temporary.

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