The EUR/GBP cross traded with negative bias through early NA session on Tuesday, albeit has managed to bounce off lows and is currently trading in neutral territory around mid-0.8800s.
The British Pound's relative outperformance, through European session on Tuesday, against its European counterpart could be attributed to the British Retail Consortium (BRC) data that showed total like-for-like sales rose 2.1% y-o-y during the month of June. The data painted a slightly rosier picture for retail sales and provided a much-needed respite for the Sterling.
However, a modest pick up in the demand for the shared currency, following upbeat comments by Benoît Cœuré, Member of the Executive Board of the ECB, helped limit further losses. Cœuré was noted saying that QE has successfully boosted economic growth and inflation prospects, which reinforced the recent ECB “taper tantrum” and provided an additional boost to the shared currency.
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The recovery move got an additional boost after BoE’s Broadbent, during a scheduled speech at the Scottish Council for Development and Industry, did not touch upon monetary policy or economic outlook, which eventually was seen weighing on the British Pound and lifted the cross to the top end of daily trading range.
From a technical perspective, the cross caught some fresh bids near a previous strong resistance, now turned support near 0.8815 level and hence, momentum back above mid-0.8800s would reaffirm near-term bullish bias and a follow through appreciating move, beyond yearly tops resistance near 0.8880 level, remains a distinct possibility.
Technical levels to watch
Immediate support remains near 0.8815 level, below which the cross is likely to weaken back below the 0.8800 handle and retest 0.8775 horizontal support. On the upside, a strong follow through buying interest beyond the 0.8850 region should lift the cross beyond the 0.8880 hurdle, and the 0.8900 handle, towards its next major hurdle near the 0.8930 region.