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Theoretically, the first day of the week was supposed to start with a clear strengthening of the US dollar, since it was not possible to fully work out the contents of the United States Department of Labor report last Friday due to the holiday. However, the behavior of the pound was completely different, as it began to sharply rise during the day. Nevertheless, it had quite good reasons for this. More precisely, just one reason. Boris Johnson personally delivered the good news that the British government is doing everything possible to lift the quarantine measures as soon as possible. After all, the UK really has all the prerequisites for this, since it is the absolute leader in the world in terms of vaccination rates against coronavirus. In general, the prospect of lifting all sorts of restrictions ahead of the designated deadlines loomed over the horizon. It is clear that such messages will raise everyone's expectations, and the British currency will suddenly become a much more attractive currency, which is basically what we saw.
Euro's behavior raises certain concerns, but there is no doubt that the intentions of the British government have nothing to do with it. Moreover, the vaccination program in the EU is much worse than in the UK. In other words, it is quite possible to talk about its complete failure. Therefore, it is unlikely to lift all sorts of restrictions anytime soon.
So, the Euro currency is quite expected to start a new trading week with a slight weakening, which can be safely called a continuation of the trend that was outlined on Friday evening. However, the picture dramatically changed right away – the single European currency has already started to grow actively. Of course, it can be assumed that it's all about the pound, which dragged the euro from the other side of the English Channel. However, this is clearly not the case. As mentioned above, British history has nothing to do with continental Europe. Moreover, the scale of the British economy is still not so large that the growth of the pound pulls the single European currency. Rather, we need to talk about the usual speculative movement.
Today, European unemployment data will be published, whose level is expected to rise from 8.1% to 8.2%. After a brief attempt to recover, the situation in the European labor market is beginning to fall again. Not to mention the fact that the unemployment rate is already incredibly high. Thus, we can see not just a return back today, but also the movement of the Euro currency below yesterday's values. At the same time, it will pull down the pound due to its scale through the dollar index.
Unemployment rate (Europe):
After yesterday's sharp growth, the Euro currency slowed down within the level of 1.1820, where it formed a temporary amplitude within 20 points. We can assume that long positions are oversold, and keeping the price below the 1.1800 mark will lead to a reversal in the market.
The GBP/USD pair showed an upward interest due to the above-mentioned information background. As a result, the pound's rate strengthened by about 90 points. Most likely, this is a local manifestation of speculators, which will subsequently lead to a decline towards the level of 1.3830.
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