EUR/GBP bulls looking to build on intraday positive move beyond 0.8700 mark
|- EUR/GBP regained positive traction on Wednesday and inched back closer to two-month tops.
- The UK political turmoil weighed on the GBP and remained supportive of the intraday move up.
- Bulls might still wait for a sustained strength beyond the 0.8720 area before placing fresh bets.
The EUR/GBP cross refreshed daily tops during the first half of the European session, with bulls making a fresh attempt to build on the momentum beyond the 0.8700 mark.
The cross stalled this week's retracement slide from the 0.8720 region, or two-month tops and gained some positive traction on Wednesday, snapping two days of the losing streak. The British pound relative underperformance could be attributed to the UK political turmoil amid the controversy over funding arrangement for Prime Minister Boris Johnson's official apartment.
Apart from this, the selling bias surrounding the sterling lacked any obvious catalyst and is likely to remain limited amid optimism over the rapid rollout of coronavirus vaccines in the UK. This bodes well with the UK Prime Minister Boris Johnson's plan for the gradual reopening of the economy, which should continue to lend support to the GBP and cap gains for the EUR/GBP cross.
On the other hand, the shared currency was pressured by a modest pickup in the US dollar. Ahead of Wednesday's FOMC monetary policy decision, investors seemed inclined to lighten their bearish USD bets amid the latest leg up in the US Treasury bond yields. This might hold bulls from placing aggressive bets and further collaborate to keep a lid on any meaningful upside for the EUR/GBP cross.
There isn't any major market-moving economic data due for release on Wednesday. This further makes it prudent to wait for some strong follow-through buying before positioning for any further gains. A sustained move beyond the 0.8720 region will set the stage for an extension of the recent strong recovery from over one-year lows. The EUR/GBP cross might then accelerate the momentum and aim to reclaim the 0.8800 mark for the first time since early February.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.