EUR/GBP spikes to fresh 6-month tops, closer to 0.9100 mark
- EUR/GBP added to its recent strong gains and climbed to fresh six-month tops on Monday.
- The shared currency benefitted from the Fed’s emergency decision to slash rates to zero.
- The UK government’s approach to coronavirus pandemic kept the GBP on the defensive.
The EUR/GBP cross finally broke out of its Asian session consolidation phase and jumped to fresh six-month tops, with bulls now eyeing a move towards the 0.9100 mark.
Following an early dip to levels just below the key 0.90 psychological mark, the cross caught some fresh bids and added to last week's strong positive move amid a strong pickup in the shared currency.
The common currency benefitted from the Fed's emergency decision on Monday to slash interest rates to zero, which resulted in the narrowing of rate differentials between the US and the euro area.
Meanwhile, the British pound's relative underperformance against its European counterpart could further be attributed to the lack of action from the UK´s government to contain the coronavirus pandemic.
This coupled with possibilities of some short-term trading stops being triggered on a sustained move beyond mid-0.9000s might have further contributed to the pair's latest leg of a sudden spike in the last hour.
However, oversold conditions on the daily chart might hold investors from placing fresh bullish bets, which might eventually turn out to be the only factor capping any strong gains for the cross, at least for now.
Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further appreciating move amid absent relevant market-moving economic releases on Monday.
Technical levels to watch