- EUR/GBP attracted some buying on Friday, albeit lacked any strong follow-through.
- Upbeat UK PMIs acted as a tailwind for the sterling and capped gains for the cross.
- Mixed set-up warrants caution for aggressive traders and before placing fresh bets.
The EUR/GBP cross retreated a few pips from daily tops touched in the last hour, albeit managed to hold with modest intraday gains around the 0.8435-30 region post-Eurozone/UK PMIs.
Having found a decent support near the 0.8420-15 region, the EUR/GBP cross gained some positive traction on Friday and inched back closer to the top boundary of its weekly trading range. The shared currency drew some support from a subdued US dollar price action and seemed rather unaffected by the mixed release of the flash Eurozone PMI prints for October.
The preliminary report from IHS/Markit research showed that the gauge measuring manufacturing sector activity in Germany and Eurozone came in slightly better than market expectations for October. The details reveal that supply bottlenecks continue to weigh on manufacturing output. Conversely, the Services PMI dropped to six-month lows during the reported month.
On the other hand, both the UK Manufacturing and Services PMIs recorded better-than-expected growth during the current month. This, to a larger, extent overshadowed dismal UK Retail Sales figures released earlier this Friday and acted as a tailwind for the British pound. This, in turn, was seen as a key factor that capped any meaningful upside for the EUR/GBP cross.
From a technical perspective, the intraday positive move faltered near a one-week-old trading range resistance. That said, acceptance above 200-hour SMA favours bullish traders. However, it will still be prudent to wait for a strong follow-through buying before confirming that the EUR/GBP cross has bottomed out and positioning for any further gains.
Technical levels to watch
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