EUR / GBP clings to modest gains around 0.8600 level, lacks continuation

• EUR / GBP regains positive traction on Tuesday and retreats above the round level of 0.8600.
• Nerves over COVID-19 and Brexit issues act like a headwind for the British pound.
• The appearance of some sales around the common currency limit any significant gains from the pair.

The crossing EUR/GBP has moved higher during the first half of the European session on Tuesday, hitting three-day highs around the 0.8610-15 region.

The crossing has regained some positive traction on Tuesday and now seeks to take advantage of its bounce from the support zone of 0.8565-60, at a three-week lows hit last week. The relative underperformance of the British pound comes amid doubts that the spread of the so-called Delta variant of covid could disrupt the UK government’s reopening plans for June 21.

Apart from this, the indications that Britain’s relationship with the European Union has been deteriorating further They have acted as a headwind for the British pound. In a further escalation of a dispute over the Northern Ireland protocol, the EU is considering tougher retaliatory measures if the UK government fails to meet its post-Brexit obligations.

Despite the support factor, the rise remains limited, at least for now, amid the emergence of some selling around the common currency. A positive rally in demand for the US dollar, along with Eurozone macroeconomic data, mostly pessimistic, German industrial production and ZEW economic sentiment, has put some downward pressure on the euro.

Furthermore, investors may also be reluctant to open aggressive positions and prefer to wait on the sidelines. before the meeting of the European Central Bank (ECB) on Thursday. Also, this makes it prudent to wait for a solid continuation of buying before investors start to position themselves for any further short-term bullish movement in the EUR / GBP cross.

EUR / GBP technical levels