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  • EUR/GBP gains traction for the second consecutive session on Thursday.
  • Weaker pound turned out to be the only factor fueling the positive move.
  • The shared currency remains depressed and might cap any further gains.

The EUR/GBP cross jumped to one-week tops during the mid-European session, with bulls now looking to extend the momentum further beyond the 0.8400 mark.

Following a brief consolidation through the early part of Thursday’s trading action, the caught some fresh bids and added to the previous session’s positive move. The cross recovered further from over two-month lows and the uptick was exclusively driven by some fresh selling around the British pound.

The upside is likely to remain limited

Despite the incoming stronger UK macro data, market concerns that Britain might crash out of the European Union at the end of the transition period later this year continued exerting some downward pressure on the sterling and turned out to be one of the key factors fueling the positive momentum.

It, however, remains to be seen if bulls are able to capitalize on the move or the attempted recovery runs out of the steam at higher levels amid an offered tone surrounding the shared currency. Pessimism about the Eurozone growth outlook kept the Euro bulls on the defensive and might cap further gains.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the cross might have already bottomed out in the near-term and positioning for any further appreciating move.

Technical levels to watch 

 

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