- EUR / GBP regains positive traction on Wednesday and retreats slightly closer to two-month highs.
- Political turmoil in the UK weighs on the GBP and continues to support the intraday bullish move.
- The bulls could still wait for sustained strength above 0.8720 before opening new positions.
The crossing EUR / GBP is struggling to gain momentum above the 0.8700 level during the European session on Wednesday.
The cross has halted this week’s retracement slide, from the 0.8720 region at two-month highs, and has gained some positive traction on Wednesday, breaking a two-day losing streak. The relative poor performance of the British pound could be attributed to political turmoil in the UK amid controversy over the financing deal for Prime Minister Boris Johnson’s official apartment.
Apart of this, the selling bias around the British pound lacks an obvious catalyst and is likely to remain limited in the middle of optimism about the rapid launch of the vaccination campaign against coronavirus in the UK. This bodes well for British Prime Minister Boris Johnson’s plan for the gradual reopening of the economy, which should continue to support the British pound and limit gains for the EUR / GBP cross.
On the other hand, the common currency has come under pressure from a modest rally in the US dollar. Ahead of the FOMC’s policy decision on Wednesday, investors appear inclined to lighten their bearish positions in the USD amid the latest upward movement in US Treasury yields. This could prevent the bulls from opening aggressive positions and could continue to work together to limit any significant rally in the EUR / GBP cross..
There are no major economic data releases on Wednesday, from the eurozone or the UK. Also, this makes it wise to wait for some solid continuation buys before positioning yourself to target additional earnings. A sustained move above the 0.8720 region will set the stage for an extension of the recent strong recovery from lows of more than a year. The EUR / GBP cross could accelerate momentum and aim to regain the round level of 0.8800 for the first time since early February.
EUR / GBP technical levels
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