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  • EUR/GBP regained traction on Tuesday and moved back closer to the overnight swing highs.
  • The uptick lacked any obvious fundamental catalyst and runs the risk of fizzling out quickly.

The EUR/GBP cross edged higher through the first half of the European session and was last seen trading near the top end of its daily range, around the 0.8780 region.

Following the previous day’s pullback from the vicinity of the 0.8800 mark, the cross managed to regain positive traction and might now be looking to build on the recovery from multi-month lows. The emergence of some fresh selling around the US dollar provided a goodish lift to the shared currency, which, in turn, was seen as a key factor lending some support to the EUR/GBP cross.

On the other hand, the British pound was seen consolidating its recent gains against its American counterpart and held steady near multi-year tops. The sterling remained well supported by the fact that the Bank of England pushed back expectations for negative interest rates. This might hold bulls from placing aggressive bets and keep a lid on any runaway rally for the EUR/GBP cross.

In the absence of any major market-moving economic releases, either from the Eurozone or the UK, any subsequent positive move might still be seen as a selling opportunity near the 0.8800 mark. This makes it prudent to wait for some strong follow-through buying before confirming that the EUR/GBP cross has bottomed out in the near-term and positioning for any further appreciating move.

Technical levels to watch