EUR/GBP bulls looking to build on intraday positive move beyond 0.8700 mark

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