The EUR/GBP cross extended its corrective slide from 1-1/2 month highs, beyond the 0.8600 handle, and now seems to have stalled its recent strong up-move from sub-0.8400 level touched last week.
In absence of any negative surprise from the UK jobs report, nor any sharp up-tick in the final Euro-zone CPI print, traders seemed inclined to take some profits off the table, especially after the pair’s recent surge of around 230-pips over the past few trading sessions.
The UK jobs report showed unemployment rate unexpectedly ticking lower to 4.6% in March, while Claimant Count Change rose more than expected and Average Earnings (including bonus) grew 2.4% (2.1% excluding bonus). Meanwhile, the final Euro-zone CPI print matched flash estimates and confirmed 1.9% yearly rise in consumer prices.
Meanwhile, the British Pound seems to have gained some additional traction from comments by the European Union’s (EU) Chief Brexit Secretary Barnier that there were no figures set for EU demands that UK needs to pay before leaving.
Meanwhile, hints of some profit taking off the EUR/USD bullish positions further collaborated to the pair’s retracement on Wednesday. It, however, remains to be seen if traders use the current dip to initial fresh long positions or continue unwinding near-term bullish bets ahead of the UK monthly retails sales data, scheduled for release during European session on Wednesday.
Technical levels to watch
Currently trading around 0.8565 level, a follow through retracement below mid-0.8500s could get extended towards 0.8530 horizontal support en-route the key 0.85 psychological mark. On the flip side, sustained momentum back above the 0.8600 handle, and a subsequent more beyond 0.8615 level, now seems to pave way for continuation of the pair’s near-term upward trajectory towards 0.8650 intermediate resistance ahead of 0.8675-80 strong hurdle.