EUR/GBP consolidates in a range around 0.8600 mark

The EUR/GBP cross lacked any firm directional bias and seesawed between tepid gains/minor losses, around the 0.8600 mark through the first half of the European session.

A combination of diverging forces failed to provide any meaningful impetus to the EUR/GBP cross and led to a subdued/range-bound price action on Wednesday. The EUR/GBP cross witness some selling and moved further away from four-day tops touched in the previous session in reaction to the Bank of England Chief Economist Andy Haldane's hawkish comments.

Haldane noted that the UK economy is going gang-busters and there may be the need to start turning off the stimulus tap. He said that the UK needs not to become too dependent on monetary medicine and is already seeing some pretty punchy pressures on prices. If pay and costs are picking up, inflation on the high street isn't very far behind, Haldane added further.

That said, the EU-UK collision over Norther Ireland protocol and talks that further easing of lockdown measures in the UK may be postponed continued acting as a headwind for the British pound. Apart from this, a modest uptick in the shared currency – amid a subdued US dollar price action – helped limit the downside for the EUR/GBP cross, at least for now.

Investors also refrained from placing any aggressive bets, rather preferred to wait on the sidelines ahead of the upcoming European Central Bank meeting on Thursday. This makes it prudent to wait for some strong follow-through selling before traders start positioning for any further decline amid absent relevant market moving economic releases.

Technical levels to watch