EUR/GBP bounce off 2-1/2 week lows, UK retail sales in focus

The EUR/GBP cross extended its near-term downward trajectory and touched a 2-1/2 week low near 0.8630 region. 

Markets moved passed the Westminster terror attack on Wednesday and a mildly positive tone around the GBP/USD major has been a key factor weighing on the major. However, a range bound price-action surrounding the EUR/USD major, despite of lower-than-expected GfK German Consumer Climate index, helped limit further losses. 

Moreover, possibilities of some bears covering their short positions, ahead of the UK retail sales data, might have also collaborated to a mild pull-back from lower levels. The latest UK retail sales figure for February is expected to break weakening trend over the past two-months, with consensus estimates pointing to a nominal growth of 0.4% m-o-m. 

UK retail sales and US AHCA amongst market movers today – Danske Bank

Later in the day, the results of the fourth and final ECB TLTRO, and the release of Euro-zone consumer confidence index might influence the shared currency and also provide some impetus for short-term traders. 

Technical levels to watch

A follow through weakness below 0.8630 level is likely to drag the cross below the 0.8600 handle towards testing its next support near 0.8580 area ahead of the very important 200-day SMA support near mid-0.8500s.

On the upside, any recovery attempt is likely to confront immediate resistance near 0.8660 level, which if cleared has the potential to lift the cross towards 0.8690 resistance before eventually boosting it further towards 0.8730-35 strong hurdle.