EUR/GBP sits near two-week tops, eyeing a sustained move beyond 0.8600 mark
- EUR/GBP gained some positive traction on Tuesday and built on its recent positive move.
- Dovish BoE, COVID-19 jitters acted as a headwind for the sterling and remained supportive.
- Stronger USD weighed on the shared currency and capped any further gains for the cross.
The EUR/GBP cross shot to near two-week tops during the mid-European session, though struggled to capitalize on the move beyond the 0.8600 mark.
Following the previous day's goodish bounce from the 0.8565 region, the EUR/GBP cross gained some positive traction on Tuesday and built on its recent bounce from two-and-half-month lows. The British pound's relative underperformance could be attributed to last week's dovish Bank of England and worries about the spread of the more contagious Delta variant of the coronavirus.
In fact, the latest official figures reported showed that the UK added 22,868 new coronavirus cases on Monday, the largest one-day increase since January 30. This overshadowed the latest optimism that the UK remains on track to end remaining curbs on social contact. The new British health minister Sajid Javid reaffirmed that coronavirus-related restrictions would be lifted on July 19.
The supporting factor, to a larger extent, was offset by a broad-based US dollar strength, which exerted some pressure on the shared currency and capped the upside for the EUR/GBP cross. The euro bulls seemed unimpressed by mostly in line flash German consumer inflation figures, which showed that the headline CPI edged lower to 0.4% and 2.3% on a monthly and yearly basis, respectively.
From a technical perspective, the EUR/GBP cross, so far, has failed to make it through a resistance marked by a two-month-old descending trend-line resistance. A sustained move beyond will be seen as a fresh trigger for bullish traders and prompt some aggressive technical buying. Bulls might then aim to test the next relevant hurdle near the 0.8640-50 supply zone.
Technical levels to watch