- The reversal of the euro from 0.8789 finds support above 0.8700.
- EUR / USD remains stuck between 0.8700 and 0.800 for the fourth consecutive week.
- In the medium term, Rabobank’s FX analysts see the euro breaking the upward channel.
The euro’s reversal from Thursday’s high of 0.8789 was contained above 0.800 on Friday, allowing the pair to move sideways, trapped in a 100 pip range for the fourth week in a row.
EUR / GBP remains neutral, euro and pound underperform
EUR / GBP continues to trade sideways, reflecting the overall weakness of the euro and pound sterling. The common currency was struck by the German High Court’s decision calling on the ECB to justify bond purchases, which has raised concerns about the Bank’s monetary policy plans to consolidate the EU economy .
The pound did not benefit from a softer euro, however. With the UK lagging behind most European countries to begin easing restrictions on COVID-19 and with uncertainty surrounding Brexit still imminent, the UK’s medium-term economic outlook remains uncertain. This weighs the pound across the board.
Rabobank FX Analysts See Pound Vulnerable in the Medium Term
According to the Rabobank FX team of analysts, the current deadlock could end with a rise in the euro, “As future agreements between the UK and the EU may not be resolved by then “In June, we expect the GBP to be under pressure. We see the EUR / GBP at 0.88 on a 1 to 3 month view with upside risk.”