EUR/GBP consolidates losses above 0.8500 ahead of BOE

• EUR/GBP bears catch a breather around early April lows.
• Strong EU PMIs battle Brexit, Delta Plus woes to keep bears hopeful.
• BOE is expected to repeat status-quo, comments over tapering will be the key.
• German data, Fedspeak and qualitative risk catalysts should be watched too.

EUR/GBP fades bounce off 11-week low, flashed the previous day, by easing to 0.8542 during Thursday’s Asian session. In doing so, the currency pair remains sidelined as mixed plays combat ahead of the key bank of England (BOE) monetary policy meeting.

Strong activity numbers from Europe failed to stop the quote from refreshing the multi-day low on Wednesday as UK PMIs remained firm too, per preliminary data for June. The downside momentum could also be linked to the pre-BOE preparations amid hopes of witnessing hawkish signals from the “Old Lady”.

That said, UK’s Delta Plus covid variant threat seems to escalate as cases jump 40% in a single day with 41 new infections, per The Independent. Even so, UK’s Vaccine Minister Nadhim Zahawi safeguards the government while saying, “The UK's vaccination rollout has saved more than 14,000 lives, and prevented 44,500 hospital admissions in England alone, including 2,500 in the past two weeks,” per Sky News.

Elsewhere, Sky News also mentioned that the MPs were told of the UK government’s confidence in agreeing on changes to the Northern Ireland Protocol with the European Union. However, Irish fishermen protest against the lower quota in the post-Brexit deal.

On a broader front, the US Federal Reserve (Fed) policymakers and Treasury Secretary Janet Yellen managed to tame the rate-hike and tapering woes, which in turn improved market sentiment. Though, uncertainty over the US President Joe Biden’s infrastructure spending package ahead of a two-week holiday in the American Senate probes market optimism.

That said, S&P 500 Futures remain mildly bid whereas the US Treasury yields also stay firmer by the press time.

Moving on, German Import Price and IFO figures, for May and June respectively, could entertain EUR/GBP traders ahead of the key BOE.

“The Bank of England MPC will announce its June monetary policy decision. The policy is likely to remain on hold, and we will be watching the Bank’s assessment of risks given stronger inflation outcomes but a delayed reopening. There is also potential for a market reaction to the MPC vote on continuing QE. The May vote was 8-1, with talk of either 2 or 3 dissenters this time,” said Westpac ahead of the event.

Technical analysis

EUR/GBP remains on the bear’s radar unless crossing a confluence of 50-day and 100-day SMA near 0.8625. However, the cross-currency pair’s immediate downside is challenged by early March’s low near 0.8530, as well as a downward sloping trend line from April 19, near 0.8510.