- EUR/GBP gained some follow-through traction for the second consecutive session on Wednesday.
- Fears of a no-deal Brexit, rising COVID-19 cases weighed on the pound and remained supportive.
- The uptick lacked any bullish conviction as investors seemed reluctant ahead of BoE on Thursday.
The EUR/GBP cross edged higher during the early European session and was last seen hovering near weekly tops, just below mid-0.9000s.
The cross quickly reversed an early dip to the 0.9010 region and turned positive for the second consecutive session on Wednesday. The uptick was led by the British pound's relative underperformance against its European counterpart and assisted the EUR/GBP cross to build on its recovery from the 0.8980 support area, or three-week lows set last Friday.
Against the backdrop of renewed fears of a no-deal Brexit, concerns over the second wave of COVID-19 infections undermined the British pound. The GBP bulls remained on the defensive following the release of final UK Services PMI, which was revised slightly lower to 56.5 for July as compared to the preliminary estimate and consensus estimates of 56.6.
On the other hand, the shared currency remained well supported by the heavily offered tone surrounding the USD and largely shrugged off mostly weaker-than-expected final Eurozone PMI prints for July. Other data released this Wednesday showed that the Eurozone retail sales increased by 5.7% MoM, marking a sharp deceleration from 20.3% rise in the previous month.
It will now be interesting to see if the cross is able to capitalize on the uptick or meets with some fresh supply at higher levels as investors start repositioning for the Bank of England on Thursday. The UK central bank is widely expected to leave its key interest rates unchanged and hence, the key focus will be on the accompanying monetary policy statement.
Technical levels to watch
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