EUR/GBP eases from 0.8750 as EU leaders fail to reach an agreement

• EUR/GBP pulls down from 0.8750 as EU leaders fail to reach an agreement.
• Good atmosphere at the meeting but lack of consensus on the COVID-19 aid pack.
• EUR/GBP forecasts: Danske Bank experts see the pair at 0.9000 in three months.

The euro is pulling back against the British pound, weighed by reports pointing out that the EU leaders have failed to reach an agreement on the COVID-19 aid package. The EUR/GBP, which was trading around 0.8750 during most of the US session, has pulled down to the 0.8720 area.  

EU leaders’ meeting: good atmosphere but no agreement

With the Eurozone going to the worst economic slump since the Second World War, the European leaders' videoconference to draft the rescue package seems to have ended without agreement. German Chancellor Angela Merkel has stressed the good atmosphere at the meeting, although the leaders have not found common ground at every point.  

Merkel has reiterated Germany’s refusal to euro bonds although she recognizes that a recovery fund is needed. The EU is under pressure to come up with a satisfying solution to support the worst-hit countries, another disagreement might heighten the differences between members might put the Union in danger and send the euro tumbling across the board.

EUR/GBP expected to appreciate to 0.9000 – Danske Bank

Regarding EUR/GBP mid-term forecasts, FX experts at Danske Bank see the pair heading towards 0.9000 over the next three months “We see EUR/GBP at 0.90 in 3M and 6M followed by a move towards 0.86 based upon the assumption of a trade deal in 12M.”

EUR/GBP key levels to watch