- EUR/GBP witnessed some short-covering bounce and moved away from near two-month lows.
- A goodish pickup in demand for the shared currency was seen as a key factor behind the move.
- A subdued GBP price action did little to influence or hinder the pair’s intraday positive momentum.
The EUR/GBP cross added to its intraday gains and refreshed daily tops, around the 0.8965 region during the mid-European session.
The cross managed to find some support ahead of the 0.8900 mark and witnessed a short-covering bounce on the first day of a new trading week. The momentum assisted the EUR/GBP cross to erase the previous session’s slide to two-month lows and was sponsored by a goodish pickup in demand for the shared currency.
The offered tone surrounding the USD continued lending some support to the euro, which seemed rather unaffected by Monday’s softer German consumer inflation figures. According to the flash estimates, the headline German CPI unexpectedly fell 0.1% MoM in August and remained flat as compared to a year earlier.
On the other hand, the British pound was seen consolidating its recent strong gains against its American counterpart and did little to influence the EUR/GBP cross. The BoE Governor Andrew Bailey’s dovish comments on Friday turned out to be one of the key factors that kept the GBP bulls on the defensive.
Bailey said the UK central bank has more ammunition to support the economy from its coronavirus shock and also supported the possibility of negative interest rates. This comes amid concerns about the lack of progress in Brexit talks, which remained supportive of the EUR/GBP pair’s move back above mid-0.8900s.
The mentioned region coincides with 100-hour SMA and some follow-through buying should pave the way for additional gains. The EUR/GBP cross might then aim back to reclaim the key 0.9000 psychological mark, though the momentum runs the risk of fizzling out rather quickly.
Technical levels to watch
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