EUR/GBP fails again at 0.8455 and returns below 0.8400

• The euro drops below 0.8400 after another rejection from 0.8455.
• The regains lost ground following the Post-BoE reversal.
• EUR/GBP seen at 0.8100 by year-end – Nordea.

The strong euro rally witnessed on Thursday, following BoE’s dovish hike, has been rejected at 0.8455 for the second time this week. The euro is losing ground on Friday returning to levels below 0.8400.

Euro bulls fade on renewed concerns about Ukraine

The common currency is trading lower across the board on Friday, with risk sentiment waning as hopes of a peace agreement between Russia and Ukraine start to whither in absence of any substantial progress.

The pair however is clinging to weekly gains and remains on track for the second positive week in a row, after bouncing from six-year lows at 0.8200 in early March.

The euro appreciated sharply on Thursday, with the GBP depreciating across the board following the Bank of England's monetary policy decision. The BoE met expectations with a 25 basis points hike although the dovish tone of the banks’ statement hammered demand for the cable.

EUR/GBP to plummet to 0.81 by year-end – Nordea

In the mid-term, FX analysts at Nordea Bank see the euro retreating further over the next months, to reach 0.81 by year-end: “The BoE did hike for a third meeting in a row and more hikes will come later this year. Hence, we favor sterling to restrengthen versus the euro and probably already during Q2 if or when we get a pause or a lasting solution between Ukraine and Russia (…) “We expect EUR/GBP to move towards 0.81 by the end of the year.”

Technical levels to watch