EUR / GBP rises to two-week highs and looks to take advantage of momentum above 0.8600

• A weaker British pound helps EUR / GBP regain positive traction on Wednesday.
• The rise appears limited ahead of the BoE meeting and German elections this week.
• A strength above the monthly highs should pave the way for a move to the 0.8670 area.

The crossing EUR / GBP has risen to new two-week highs during the European session on Wednesday, with the bulls now expecting a sustained move above the 0.8600 level.

The crossover has regained traction on Wednesday and is now looking to build on its recent rebound from the key psychological level of 0.8500, close to one-month lows touched last week. The relative underperformance of the British pound lacks any obvious fundamental catalyst and could only be attributed to some repositioning trade prior to the FOMC policy decision.

On the other hand, a weak action in the price of the US dollar has acted as a tailwind for the common currency, which in turn has offered some support to the EUR / GBP cross. Having said that, the climb seems limitedas investors could refrain from opening aggressive positions before this week’s key events: the BoE meeting on Thursday and the German federal elections on Sunday.

Therefore, any subsequent positive movement is likely to face stiff resistance and remain limited near the monthly highs, around the region of 0.8615. This, in turn, justifies some caution for aggressive bulls and positioning for any further gains amid the absence of relevant economic releases from either the eurozone or the UK.

From a technical perspective, a few continuation purchases beyond the aforementioned barrier will set the stage for additional earnings. The EUR / GBP cross could accelerate momentum and rise towards challenging the resistance zone of 0.8670 before finally aiming to regain the round level of 0.8700.

EUR / GBP technical levels