EUR/GBP clings to modest gains around mid-0.8500s, lacks follow-through

The EUR/GBP cross rallied around 30 pips from the daily swing lows and shot to the top end of its daily trading range, around the 0.8555 region in the last hour.

Following the previous day's good two-way price swings, the EUR/GBP cross witnessed some selling during the first half of the European session. The early downtick, however, lacked any follow-through selling, instead was quickly bought into near the 0.8525 region.

Concerns about a fresh COVID-19 outbreak in the UK turned out to be one of the key factors behind the British pound's relative underperformance against its European counterpart. This overshadowed the overnight hawkish comments by the Bank of England policymaker Michael Saunders.

During a scheduled speech on Thursday, Saunders said that the question of whether to curtail the current asset purchases early will be under consideration at our forthcoming meetings. This pointed to a possible change in stance among rate-setters, though failed to impress the GBP bulls.

On the other hand, the shared currency found some support from a subdued US dollar price action. This was seen as another factor that provided an additional boost to the EUR/GBP cross. It, however, remains to be seen if bulls can capitalize on the move or face rejection at higher levels.

There isn't any major market-moving economic data due for release on Friday. This further makes it prudent to wait for some follow-through buying before positioning for an extension of this week's bounce from over three-month lows, around the 0.8500 psychological mark touched on Wednesday.

Technical levels to watch