“¢ Renewed GBP selling helps regain traction after yesterday’s brief pause.
“¢ Weaker sentiment surrounding EUR now seemed to cap additional gains.
“¢ The latest BoE policy update to help determine near-term directional move.
The EUR/GBP cross caught some fresh bids on Thursday and might now be making a fresh attempt to decisively move back above the 0.8800 handle.
The UK Prime Minister Theresa May managed to clear a final obstacle to the EU withdrawal bill and won a crunch parliamentary vote on Wednesday. The news provided a minor boost to the British Pound and the cross stalled its post-ECB recovery move, snapping three consecutive days of winning streak.
The optimism, however, turned out to be short-lived, with some renewed GBP selling helping the cross to regain positive traction after yesterday’s brief pause and move back closer to weekly tops.
Meanwhile, the prevailing bearish sentiment surrounding the shared currency, coupled with investors’ reluctance to place any aggressive bets ahead of the June BoE monetary policy decision now seemed to keep a lid on any further up-move, at least for the time being.
The UK central bank is widely expected to leave interest rates on hold and hence, the focus would be on accompanying minutes for fresh hints on an August hike. The British Pound may see some upside on a hawkish vote count, while a neutral stance might force market participants to scale back bets for an imminent rate-hike in the near-future and would be enough to prompt fresh GBP weakness.
Technical levels to watch
Momentum beyond the 0.8800 handle is likely to confront resistance at the very important 200-day SMA, around the 0.8820 region, above which the cross is likely to head towards challenging the 0.8840-45 supply zone.
On the flip side, the 0.8775-70 region now seems to protect the immediate downside, which if broken now seems to pave the way for additional downside towards 0.8720 horizontal support en-route the 0.8700 handle.
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