EUR/GBP slides further under 0.8780, to lowest in four-weeks

• France and Spain's inflation numbers surpass expectations, according to preliminary data in February.
• Agreement between the UK and EU boosts the Pound.
• EUR/GBP moving with a bearish bias.

The EUR/GBP is falling on Tuesday, trading at the lowest level in a month. The cross broke under 0.8780 and fell to 0.8759, the lowest level since late January.

EUR and GBP outperforming

Despite falling versus the Pound, the Euro is among the top performers on Tuesday boosted by rising Eurozone government bond yields. The German 2-year yield rose to the highest since 2008 and the 10-year stands at 2.70%, up 4.65% for the day, at the highest since July 2011.

France and Spain reported preliminary inflation numbers showing an unexpected acceleration. French CPI rose 7.2% from a year ago, against expectations of 7%. Spain's CPI rose 6.1% from 5.9%, above the market consensus of 5.7%.

Inflation figures boosted a decline in European bonds and an increase in European Central Bank tightening expectations. Despite those effects, EUR/GBP drifted lower.

The Pound benefited from the deal between the European Union and the United Kingdom on the Northern Ireland Protocol. "This had been widely reported for weeks but markets reacted positively to the news. Now comes the hard part, as Prime Minister Sunak must get Parliament to approve the agreement", explained analysts at Brown Brothers Harriman. They suspect the deal will eventually be passed "but there is absolutely nothing to get bullish about. The agreement simply avoids a potential trade war as the UK had threatened to unilaterally change the Brexit deal, which would trigger sanctions from the EU".

The Brexit deal and an improvement in market sentiment are favoring the Pound on Tuesday. Also, some technical factors contribute to the negative momentum. EUR/GBP broke below 0.8780 and fell to 0.8759. It is hovering near the lows, under pressure.

Technical levels