- GBP/EUR close to topping out on charts, ahead of turn lower.

- Technical analyst sees GBP/EUR near to parity in three weeks.

- But recovery of risk appetite could spare GBP from such losses.

- As coronavirus advance on major economies loses momentum.

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- Spot GBP/EUR rate at time of writing: 1.1358

- Bank transfer rates (indicative): 1.1060-1.1140

- FX specialist rates (indicative): 1.1200-1.1256 >> More information

The Pound-to-Euro rate extended its bounce off post-referendum lows last week, closing one and a half percent higher for the period Friday and the charts suggest it's now close to having risen as far as it's likely to, although improved risk appetite might still lift the British currency this week.

Sterling crept higher against the Euro through much of last week owing more to weakness in the single currency than strength in the Pound, with investors left exacberated by the lack of a common solution to the fallout of the coronavirus crisis from politicians and policymakers stood behind the common currency.

The Pound-to-Euro ratre was 1.54% higher for the week by the time of Friday's close after Sterling capitalised more than its European counterpart from profit taking that occured between the London and New York closes on Friday. That could indicate a greater concern among Dollar bulls about the prospect of a Sterling recovery than there are about a sudden comeback of the Euro. But the charts suggest the Pound is now close to having run its course.

Above Pound-to-Euro rate at hourly intervals alongside GBP/USD (black line) and EUR/USD (orange line).

"In this vicinity we also find the 61.8% retracement at .8747. We also note TWO 13 counts on the 240 minute chart and a TD perfected set up on the daily chart – they imply the end of the down move," says Karen Jones, head of technical analysis for currencies, commodities and bonds at Commerzbank.

Jones notes EUR/GBP has reached 0.8753, putting it and the Pound-to-Euro rate in retreat from their respective 200-day moving-averages, and has warned that she cannot rule out Sterling rising as high as 1.1547 and the EUR/GBP rate falling as low as 0.8660 over the coming days. However, she's also told clients that any such moves should be short-term and that the charts are increasingly signalling that Sterling is topping out and the Euro bottoming out.

Sterling will soon encounter the 200-day moving average at 1.1432 and the 61.8% Fibonacci retracement of the 2020 downtrend slightly above there. Both are formidable technical resistance levels that will likely require some increased upside momentum in order for them to be overcome. Jones sees the Pound failing to sustain any break above these levels and forecasts the Pound-to-Euro rate will fall all the way to 1.02 over the next three weeks or so and remain around those kinds of levels for months to come.

Above Pound-to-Euro rate at daily intervals, repelled by 200-day moving-average ahead of the 61.8% Fibonacci retracement.

The Pound-to-Euro rate is effectively GBP/USD over EUR/USD, which means the relative pace of gains and losses in the two latter rates dictate price action in GBP/EUR. This is important because the two Dollar-facing exchange rates often behave very differently to each other and lately the key determinant of that difference has been the ebb and flow of risk appetite among investors.

Sterling has fared worse against the Dollar than the Euro in times of risk aversion, as was evidenced again Friday between 13:00 and the London close when GBP/EUR fell as investors bought the safe-haven Dollar in response to the March non-farm payrolls report that showed coronavirus eating away at the job gains of recent years. In just one single month the virus eliminated nearly all the new jobs created during the Trump presidency.

"Distortions aside, though, the number of tests continues to rise, and the proportion of positive tests is beginning to fall," says Ian Shepherdson, chief economist at Pantheon Macroeconomics. "Case growth continues to slow in continental western Europe...Elsewhere, Spain, Germany, the Netherlands and Austria all reported the lowest daily increases since the crisis began."

Above Pound-to-Euro rate at weekly intervals, repelled by 200-week moving-average ahead of the 61.8% Fibonacci retracement.

Friday's price action might mean the Pound-to-Euro rate could be expected to continue underperforming as and when the market mood darkens, although the rub for the Euro is that investors will have reason the cheer when they return to their desks on Monday because the coronavirus' advance on major economies appears to be losing momentum.

The pace at which the coronavirus spreads is the most important driver of financial markets and exchange rates at present although some analysts expect that in the coming weeks the market focus will shift from the rate of spread to the pace at which so-called 'lockdowns' can lifted. There are a number of economic figures due out over the coming week although many relate to the pre-lockdown period and few will tell investors anything they don't already know.

"The dollar is likely to maintain much of its strength over the short-term at least with no real clarity yet available for investors to shape expectations with more conviction," says Lee Hardman, a currency analyst at MUFG. "If COVID-19 is peaking, expect a greater focus on lockdowns being slowly reversed in the second half of April into May. That could set the scene for a USD reversal in June, into the end of Q2."