EUR / GBP still under pressure below the 0.8600 level

• EUR / GBP is moving lower on Tuesday and extends the previous day’s retracement from the one-week highs.
• The upbeat UK employment data adds to the positive outlook and benefits the British pound.
• The sustained selling bias around the USD benefits the euro and helps limit the slide, at least for now.

The crossing EUR/GBP moves slightly lower and remains under pressure near the three-day lows just below the 0.8600 level during the European session on Tuesday.

The cross has extended the sharp retracement of the previous day, from the week-long highs around the 0.8630 region, and has remained under pressure for the second day in a row on Tuesday. The optimistic outlook for the UK’s economic recovery after the pandemic, amid the gradual relaxation of lockdown restrictions, has been seen as a key factor behind the sterling’s relative superior performance against its European counterpart.

Market expectations were reaffirmed following the latest monthly UK employment details, which showed the unemployment rate unexpectedly dropped to 4.8% during the three months to March. Furthermore, the change in unemployment solitudes showed a surprise drop of -15,100 in April. This was well below estimates pointing to an increase of +25,600.

On the other hand, the common currency has been supported by the prevailing selling bias around the US dollar. This, in turn, has offered some support to the EUR / GBP cross and has helped limit any further losses, at least for now. Market participants are now awaiting the release of the preliminary version (second estimate) of the first quarter euro zone GDP, which is expected to show a contraction of 0.6%.

EUR / GBP technical levels