EUR/GBP flits with monthly tops, just below 0.8600 mark post-Eurozone CPI
- EUR/GBP attracted some dip-buying on Tuesday and turned positive for the second straight session.
- The sterling’s underperformance could be attributed to the recent spike in COVID-19 cases in the UK.
- Weaker USD, hotter-than-expected Eurozone CPI underpinned the euro and remained supportive.
The EUR/GBP cross held on to its modest intraday gains through the first half of the European session and was last seen trading near the 0.8585-90 strong horizontal resistance.
The cross attracted some buying near the 0.8560 region on Tuesday and turned positive for the second successive session, with bulls now awaiting a sustained break through a three-day-old trading range. The recent surge in new COVID-19 cases in the UK turned out to be a key factor behind the British pound's relative underperformance against its European counterpart.
On the other hand, the shared currency remained supported by the prevalent selling bias surrounding the US dollar and hotter-than-expected Eurozone consumer inflation figures. According to the flash estimates, the headline CPI accelerated to a 10-year high and came in at a 3.0% YoY rate in August. This was well above market expectations for a rise to 2.7 from 2.2% previous.
Adding to this, the core CPI jumped 1.6% YoY in August as against 1.5% anticipated and 0.7% recorded in July. The upbeat data supports might have already set the stage for additional gains for the common currency. That said, traders might wait for some follow-through buying beyond the 0.8595-0.8600 region before placing fresh bullish bets around the EUR/GBP cross.
Technical levels to watch