EUR/GBP has helped fuel the sharp rebound in EUR/USD as that cross reverses early New York weakness and screams back above 0.9000. Firm support in the 0.8940/50 area was tested but passed the test, setting of a scramble to cover shorts as EUR/USD successful maintained the 1.2700 level, bottoming at 1.2723.
Cable has been under pressure for the past two sessions, weighed down by the prospect of the BOE moving toward zero rates and undertaking credit ease like the Fed (buying bonds with borrowed money). The pound is more exposed than the dollar in that circumstance because it no longer has reserve currency status, an advatage the dollar maintains in spades despite the misgivings of its bondholders.
EUR/GBP comes in now at 0.9040 and 0.9060.
