EUR/GBP jumps back closer to nearly two-week high, lacks follow-through

The EUR/GBP cross shows some resilience below the 0.8800 round-figure mark and recovers a major part of its modest intraday losses. The cross climbs to mid-0.8800s during the early European session and is currently placed just a few pips below a nearly two-week high touched this Wednesday.

The British pound fades an intraday bounce after the Bank of England downplayed speculations that it could extend the emergence bond-buying Friday’s deadline. This comes on the back of the dismal UK GDP print and turns out to be a key factor that assists the EUR/GBP cross to attract some dip-buying. The UK Office for National Statistics reported that the economy unexpectedly contracted by 0.3% in August, reinforcing the BoE's prediction for a recession this year.

The intraday uptick, however, lacks bullish conviction and warrants some caution before positioning for an extension of the EUR/GBP pair's recent bounce from the monthly low. Investors remain concerned about the economic headwinds stemming from a further escalation in the Russia-Ukraine conflict. This, along with the underlying strong bullish sentiment surrounding the US dollar, is acting as a headwind for the shared currency and capping the upside for the EUR/GBP cross.

Moving ahead, market participants now look forward to a scheduled speech by the European Central Bank President Christine Lagarde, which might influence the common currency. Apart from this, the action in the UK gilts market will be looked upon to grab short-term trading opportunities around the EUR/GBP cross.

Technical levels to watch