EUR/GBP clings to gains near multi-week tops, around 0.8575 area

• An offered tone surrounding the sterling assisted EUR/GBP to capitalize on its recent move up.
• Disappointing UK Retail Sales added to worries about job losses and weighed on the sterling.
• Stronger USD kept the euro bulls on the defensive and capped any further gains for the cross.

The EUR/GBP cross held on to its gains through the first half of the European session and was last seen trading around the 0.8575 region, just below the four-week tops touched earlier this Friday.

The cross gained some follow-through traction for the second successive day and built on its recent strong rebound from mid-0.8400 or the lowest level since February 2020. A combination of factors acted as a headwind for the British pound, which turned out to be an exclusive driver of the EUR/GBP pair's positive move.

The UK monthly Retail Sales dropped 2.5% in July as against market expectations for a modest 0.4% growth. Moreover, sales excluding fuel also fell short of estimates and declined by 2.4% MoM, while readings for June were revised lower. This comes on the back of Wednesday’s softer UK consumer inflation figures.

Apart from this, worries that job losses in the UK will rise after the furlough scheme ends in September now seemed to have dashed hopes for a rate hike from the Bank of England in the near future. This, in turn, was seen as a key factor behind the sterling’s underperformance and provided a goodish lift to the EUR/GBP cross.

On the other hand, sustained US dollar buying weighing on the shared currency, which, in turn, held traders from placing fresh bullish bets and capped gains for the EUR/GBP cross. Nevertheless, the pair remains on track to post its second consecutive weekly gains amid absent relevant economic data from the Eurozone.

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