- EUR/GBP struggled to preserve its modest intraday gains to multi-day tops.
- The optimism over the reopening of the UK economy underpinned the GBP.
- The euro bulls remain on the defensive after the EU’s economic forecasts.
The EUR/GBP cross quickly retreated around 20 pips from three-day tops touched in the last hour and has now dropped to the lower end of its daily trading range. The cross was last seen trading just above mid-0.8500s, nearly unchanged for the day.
The cross gained some positive traction during the early part of the European session and built on the previous day's strong rebound from the 0.8535 region, or near two-week lows. The uptick, however, lacked any strong follow-through buying, instead ran out of steam near the 0.8680-85 region amid a modest GBP strength.
The UK Prime Minister Boris Johnson's announcement on Monday that all restrictive measures would be lifted on July 19 continued acting as a tailwind for the British pound. This, in turn, was seen as a key factor that kept a lid on any meaningful upside for the EUR/GBP cross, rather prompted some fresh selling at higher levels.
On the other hand, the shared currency was seen consolidating the overnight losses led by the dismal ZEW survey, which showed that investors sentiment in the Eurozone's biggest economy fell sharply in July. In fact, the German ZEW Economic Sentiment index tumbled to 63.3 for the current month from 79.8 recorded in June.
Meanwhile, bullish traders seemed rather unimpressed by the upbeat EU Commission’s economic forecasts. In its latest quarterly economic projections, the commission upwardly revised the Eurozone growth and inflation estimates for this year due to the reopening of the bloc's national economies during the second quarter.
There isn't any major market-moving economic data due for release on Wednesday, either from the Eurozone or the UK. That said, the release of the highly-anticipated FOMC June meeting minutes will influence both, the euro and the sterling. This, in turn, might produce some trading opportunities around the EUR/GBP cross.
Technical levels to watch
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