- EUR/GBP gained some traction and added to the previous day’s strong intraday positive move.
- The GBP bulls seemed rather unimpressed by Tuesday’s softer-than-expected UK GDP report.
- The euro lacked any firm directional bias as the focus remains on Thursday’s ECB policy decision.
The EUR/GBP cross edged higher following the release of mixed UK macro data and was last seen trading near one-week tops, around mid-0.9000s.
Following an early dip to the 0.9020 region, the cross attracted some buying and was now looking to build on the previous day's strong positive move of around 100 pips. The British pound remained depressed following the release of UK macro data and was seen as one of the key factors lending some support to the EUR/GBP cross amid a subdued action surrounding the shared currency.
According to the UK monthly GDP report, the economy registered a modest growth of 1.8% in May as compared to 5% expected and the previous month's coronavirus-induced sharp contraction of 20.3%. The softer reading, to a larger extent, negated upbeat manufacturing production data, which arrived at +8.4% MoM in May as against a fall of 20.9% expected and -24.4% booked in April.
Meanwhile, the total industrial output matched consensus estimates and came in to show a growth of 6.0% in May. This along with persistent Brexit-related uncertainties kept the GBP bulls on the defensive and remained supportive of the EUR/GBP pair's mildly positive tone.
On the other hand, the euro struggled to gain any meaningful traction and had a rather muted reaction to the release of mostly inline German CPI print as investors seemed reluctant to place any aggressive bets ahead of the ECB policy decision on Thursday. This could turn out to be the only factor that might keep a lid on any strong gains for the cross, at least for now.
In the meantime, Tuesday's release of the German/Eurozone ZEW economic survey results might influence the common currency and produce some short-term trading opportunities.
Technical levels to watch
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