EUR/GBP surrenders intraday gains despite mostly upbeat Eurozone PMIs

The EUR/GBP cross surrendered modest intraday gains and dropped to the lower end of its daily trading range, around the 0.8615-10 region during the early European session.

The cross struggled to capitalize on its early uptick, instead met with some fresh supply near the 0.8630 region in reaction to softer-than-expected German Manufacturing PMI print for May. In fact, the gauge fell to 64.0 during the reported month from 66.2 prior and pointed to the slowing pace of expansion in Germany's manufacturing sector.

The softer reading, to a larger extent, was offset by stronger than anticipated readings for the region's dominant services industry. Nevertheless, the data indicated that the further lifting of virus restrictions boosted business activity and added credence to the optimistic outlook, which should help limit the downside for the EUR/GBP cross.

On the other hand, the British pound was supported by Friday's upbeat UK Retail Sales figures for April. Following this week's stronger employment details/CPI report, the data reinforced expectations for a stronger economic recovery. That said, the uncertainty over the post-Brexit agreement on Northern Ireland held the GBP bulls from placing aggressive bets.

Even from a technical perspective, the EUR/GBP cross has been oscillating in a range over the past three trading sessions. This further warrants some caution before positioning for any firm near-term direction. Market participants now look forward to the release of flash UK PMI prints for some meaningful trading opportunities.

Technical levels to watch