- EUR / GBP holds gains despite optimistic data from the German PPI.
- The ECB forecasts a decline in the euro’s GDP between 5% and 12% this year.
- EU-Germany tensions weigh on the regional currency, the woes of Brexit / virus disappoint buyers of the British pound.
- EU GDP will be the key to watch outside of the qualitative catalysts.
EUR / GBP is paying close attention to the German PPI, which climbed to 0.8850, up 0.18% on a day, Friday morning. German bearish figures do not seem to have disappointed the pair’s traders, as German and European GDP figures are still pending. Pessimism in the UK regarding the Brexit / virus epidemic could also favor the pair.
German producers Price index slipped below -0.60% and -1.8% of the respective forecasts on MoM and YoY at -0.7% and -1.9% in this order. Although waiting for key data limits the pair’s immediate decline, despite the weak PPI figures, the EU-Germany tension keeps the pair’s immediate movements.
Since European Central Bank (BCE) has been challenged on its proportionality to the stimulus, by the German court, the leaders of the bloc are scrambling with German decision-makers to justify their superiority. Recently, French FM Bruno Le Maire said that the German court’s decision suggested limits to monetary policy, needs the EU stimulus fund. Earlier, ECB Executive Board member Fabio Panetta said that the European Central Bank is under the jurisdiction of the European Court of Justice.
At the counter, the European Union (EU) and British decision-makers also present their rivalry via Brexit issues. Although this is the third round of negotiations, diplomats still have no answers regarding the fishery, the borders of Northern Ireland and the legislative constitution after the official departure on December 31, 2020.
Elsewhere, the risk tone of the markets was positive belatedly given the improvement in the chances of another recovery plan in the United States. However, viral data continues to spread fears of wave 2.0 and confirms optimism.
That said, yields on 10-year US Treasuries remain slightly positive while European markets should react to the data.
Continuing, traders will keep their eyes on preliminary German and European GDP figures for Q1 2020. On this subject, TD Securities said: “Today we get the first estimate of German GDP in Q1, where we are looking for a -2.5% q / q decline (market -2.3%). This would leave Germany substantially outperforming the eurozone as a whole, where the initial estimate of GDP came out at -3.8% q / q, and the second draw is also expected later this morning. “
The repeated failures to cross the SMA at 50 days favor the pair’s retreat towards the return to a level of SMA at 21 days of 0.8765. However, a daily closing beyond the same 0.8860 resistance can lead the listing further north towards 0.9000 round number comprising several levels marked in March.