EUR/GBP hangs on to gains near 1-week high, holds steady above 0.8350

• EUR/GBP opened with a gap higher on Monday, although it lacked follow-up buying.
• The Ukraine crisis continued to act as a headwind for the euro and limited the uptrend.

The crossing EUR/GBP It maintained its offered tone during the mid-European session and was last seen trading around the 0.8370 region, just a few pips below a one-week high.

The first round of the French presidential election showed incumbent Emmanuel Macron holding a slight lead in the polls over his far-right rival Marine Le Pen. This, in turn, offered some support to the shared currency and led to the opening of a bullish gap for the EUR/GBP cross.

The price of the cross added to Friday’s bounce from the 0.8300 area, although it lacked any follow-on buying or bullish conviction. Investors remain concerned that the European economy, which relies heavily on Russia for its energy needs, will suffer the most from the Ukraine crisis.

On the other hand, some strength stemming from a strong intraday rally in the GBP/JPY cross benefited the British pound and further helped limit gains in the EUR/GBP cross. This, in turn, warrants some caution ahead of Thursday’s European Central Bank meeting.

This makes it prudent to wait for some follow-up buying before confirming that the recent sharp drop from levels just above the 0.8500 psychological level, or yearly high, has run its course. However, the EUR/GBP cross has so far managed to hold onto its gains above 0.8350.

In the absence of major market-moving economic releases, new developments surrounding the Russia-Ukraine saga will influence the shared currency. This, in turn, should provide some momentum to the EUR/GBP cross, although traders may want to refrain from making aggressive directional bets.

Technical levels