EUR/GBP clings to modest gains above 0.8700 mark, lacks follow-through

The EUR/GBP cross jumped to fresh session tops, around the 0.8735 region in the last hour and recovered a major part of the previous day's negative move.

The cross continued showing some resilience below the 0.8700 round-figure mark and once again managed to attract some buying near multi-week lows support, around the 0.8680-75 region held since mid-April.

The cross broke out of its daily consolidative trading range and gained some positive traction during the early European session following the release of worse-than-expected UK Construction PMI.

This comes amid the ever-increasing number of coronavirus cases and related deaths in the UK, which coupled with increasing prospects for an extended lockdown took its toll on the British pound.

Meanwhile, the prevalent bearish sentiment surrounding the shared currency failed to impress bullish traders or assist the cross to build on the intraday positive move further beyond 200-hour SMA.

The top German court ruling on Tuesday fueled worries over the country's participation in the stimulus program aimed at cushioning the economic blow from the coronavirus and continued weighing on the euro.

Meanwhile, the European Commission, in its latest economic forecasts for the region, warned about the deepest economic downturn in history, which might further contribute towards capping the cross.

Meanwhile, the cross has been confined in a broader trading band around the very important 200-day SMA over the past one month or so, warranting some caution before placing fresh directional bets.

Hence, it will be prudent to wait for a sustained break in either direction before positioning aggressively for the near-term trajectory as the focus now shifts to the BoE decision on Thursday.

Technical levels to watch