- EUR/GBP gains strong positive traction on Thursday and recovers to a near two-week high.
- Upbeat comments the day before from ECB policymakers buoyed the common currency.
- Dovish action around the British pound did little to dampen the strong positive intraday move.
The crossing EUR/GBP has extended its strong intraday gains and has jumped to a nearly two-week high, around the 0.8365 region, during the first half of the European session on Thursday. At time of writing, the cross quotes at 0.8343, still up 0.48% on the day.
Following good price moves in both directions the previous day, the EUR/GBP cross has captured some aggressive buying on Thursday and has built on its recent bounce from 0.8250, or the multi-week low hit on April 14. European Central Bank (ECB) policy chief Martins Kazaks said on Wednesday that “a rate hike is possible as soon as JulyThis comes on the heels of the recent rise in German 10-year yields to a level last seen in July 2015, close to the psychological level of 1.00% on Tuesday, benefiting the euro.
This, along with some repositioning operations before the speech of the president of the ECB, Christine Lagarde, later Thursday, contributed to the common currency’s outperformance. On the other hand, sterling has, so far, struggled to gain any significant traction, which has acted as a tailwind for the EUR/GBP cross. Having said that, concerns about the potential economic downturn from the ongoing war in Ukraine could prevent investors from opening aggressive bullish positions and limit any further gains for the pair.
Investors will also be looking for clues from the Governor of the Bank of England, Andrew Bailey, in the same event. However, the mixed fundamental backdrop makes it prudent to wait for a sustained move back above the 0.8400 round level before confirming that the EUR/GBP has bottomed out in the near term. This will set the stage for further gains and allow the bulls to re-challenge the very important 200-day SMA, currently around 0.8450.
EUR/GBP technical levels
Source: Fx Street
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