EUR/GBP Euro not surrendered

Rates in Europe continue to defy the ECB, as today yields rise again before the start of the session. Ten-year bond yields are at their highest level since May 2019, climbing to -0.08%, and that will start attracting market attention today. Treasuries are still mostly in a certain range, so there will probably be no wider spillover, but in the context of the ECB, this shows that the market will do what it wants. If real yields continue to climb, this will certainly be a problem for the central bank in the future. Period. The Vice-President of the ECB, Luis de Guindos, stated the following: that the speed of vaccination is crucial for the economy and its recovery, and that the volatility of the crypto market does not pose a risk to overall financial stability.

Germany reports 11,040 new coronavirus cases, 284 deaths in the latest update today. It should be noted that the rate lasting 7 days is further reduced to 72.8, while it is noticed that the total number of active cases is reduced to 187,000, to the lowest level since the end of March. This is quite encouraging as it can lead to an easing of restrictions as vaccination also progresses. House price inflation in the UK accelerated to its highest level in 14 years in March, data from the National Statistics Office showed on Wednesday. The house price index rose 10.2 percent year-on-year, after rising 9.2 percent in February.

The annual rate of house price inflation was the highest since August 2007. Consumer price inflation in the UK exceeded expectations in April in terms of higher energy prices. Consumer prices rose 1.5 percent year-on-year in April, double the 0.7 percent increase in March. A similar higher rate was last seen in March 2020. It was predicted that prices would rise by 1.4 percent in April.

At the May meeting of the Monetary Policy Committee, the policymakers of the Bank of England said that, although inflation is below the 2% target, it will temporarily rise above the target at the end of 2021, mainly thanks to the development of energy prices. The BoE predicted that inflation would rise to 2.5 percent in 2021 and return to 2 percent in 2022.

On the daily time frame, we will do the following technical analysis. After declining from 0.85000, we now have support at 0.85500 with support for 78.6% Fibonacci levels. For a stronger transition to the bullish trend, we need a break above the moving averages MA20, EMA20, and MA50, which would help us continue towards a 61.8% Fibonacci level at 0.87500. The EUR/GBP pair can also climb to MA200 and EMA200 if the bullish momentum is strong enough. We only have a bearish option if we see a break below 78.6% Fibonacci levels. Looking at the MACD indicator, we see that we are making a turn to the bullish side, and for a stronger bullish signal, we need to break the blue MACD lines above the signal line.