EUR/GBP uptrend stalls below 0.8860/70 resistance area

• EUR/GBP rally from 0.8700 area hs stalled below 0.8860/70 resistance area.
• The euro remains firm with the pound weighed by COVID-19 and Brexit risks.
• Above 0.8865, the pair might accelerate its uptrend towards 0.9060 – Commerzbank.

Euro rally from lows near 0.8700 earlier this week has stalled right below the top of the last six weeks’ trading range, at 0.8860/70. The pair has failed on its three attempts to breach April 7 and April 21 highs, although it has remained steady above 0.8800 during the last sessions.

The euro appreciates on pound's weakness

The common currency has been pushing higher this week, favoured by the widespread pound weakness. The sterling has been hit by market concerns about the economic impact of coronavirus, the UK will be among the last European countries to lift the pandemic restrictions, and the consequences of the Brexit.

Recent UK data has not helped to raise spirits either. The RICS house prices index has shown a 21% decline in April, while the GDP figures advanced a 5.8% economic contraction in March, the greatest monthly fall since records began in 1997.

EUR/GBP will complete a base on a close above 0.8865 – Commerzbank

According to Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, above 0.8865, the pair would confirm a base and target 0.9060 area, “EUR/GBP is showing signs of recovery and is trading above the 200-day ma at .8715 – it looks well placed to challenge .8864/65. A close above here will confirm a short term base targeting .9060 This potential base will remain valid while the market continues to trade above the April low at .8671.”