• The incoming German CPI data prompts a goodish pickup in the shared currency.
• Technical buying above 0.8890-95 region further collaborated to the positive move.
The EUR/GBP cross caught some strong bids during the early European session, with bulls now looking to build on the momentum back above the 0.8900 handle.
After an initial dip to a session low level of 0.8881, the cross caught some fresh bids and turned higher for the second consecutive session. The latest leg of a sharp uptick over the past couple of hours could be attributed to a sudden pickup in the demand for the shared currency, supported by the incoming German prelim CPI data.
Adding to this, possibilities of some short-term trading stops being triggered, on a sustained move above 0.8890-95 horizontal zone, also seemed to be one of the factors contributing towards the ongoing positive momentum over the past couple of hours.
It would now be interesting to see if the cross is able to build on the positive momentum as investors look forward to the composite German consumer inflation figures for some fresh impetus ahead of Tuesday's flash Euro-zone CPI print.
This along with important UK macro releases, scheduled at the start of a new month, and the highly anticipated BoE monetary policy decision guarantees a volatile price action through the end of this week.
Technical levels to watch
Immediate resistance is pegged near 0.8925-30 area, above which the cross is likely to retest the 0.8955-60 supply zone before eventually aiming to reclaim the key 0.90 psychological mark. On the flip side, the 0.8880 area now seems to have emerged as an immediate support and is followed by 0.8860 horizontal zone, which if broken might turn the cross vulnerable to slide back towards challenging the key 200-day SMA support, currently near the 0.8800 handle.
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