Clinging to gains near 2-1 / 2-week highs following bullish eurozone PMIs

• EUR / GBP rises to more than two weeks high in reaction to positive French and German PMI figures.
• The bulls await a move above the 200-period SMA on the 4-hour chart before opening new positions.

The EUR / GBP cross has moved higher at the beginning of the European session on Wednesday and has spiked to two-and-a-half week highs, around the 0.8645 region in the last hour.

The common currency has found some support after the release of better than expected PMI figures for France and Germany. On the other hand, softer UK consumer inflation figures further contributed to the sterling’s relatively underperformance against its European counterpart.

From a technical perspective, the rally has stopped near a resistance marked by the 200-period SMA on the 4-hour chart. The bulls could wait for some subsequent purchases above the mentioned barrier before positioning themselves for an extension of the recent bounce from the lows of more than a year.

Meanwhile, the oscillators on the 1 hour chart have been gaining positive traction, but have yet to confirm a bullish bias on the daily chart. This, in turn, warrants some caution for aggressive bulls amid a surge in COVID-19 infections and pandemic-related lockdowns in Europe.

That said, a sustained move above said hurdle could push the EUR / GBP cross above the monthly highs, around the 0.8665-70 region. Momentum could extend further towards the 0.8700 level, above which the bulls could aim to retest the 0.8730-35 resistance zone.

On the other hand, the breaking point of short-term resistance at the downtrend line, currently around the 0.8600 level, now appears to defend the immediate decline. Any subsequent decline could be seen as an opportunity to initiate bullish positions and limit the further decline of the EUR / GBP.

EUR / GBP 4-hour chart

EUR / GBP technical levels