EUR/GBP clings to gains near multi-week tops ahead of ECB

The shared currency extended its outperformance against the British Pound, lifting the EUR/GBP cross to 0.8700 mark for the first time since Jan. 18.

The cross has been persistently moving higher over the past couple of weeks, from the vicinity of 0.8400 handle touched on Feb. 22, amid renewed Brexit worries. Market concerns were further elevated after the UK PM Theresa May on Tuesday faced a second defeat in the House of Lords, which some analysts now think might delay her deadline to trigger Article 50 by end of March.

Meanwhile, spot gained some fresh traction on Thursday in wake some short-unwinding trade surrounding the shared currency in anticipation of hawkish ECB outlook. 

The European Central Bank is scheduled to announce its monetary policy decision in a short while from now and would be accompanied by the central bank’s new projections for inflation and growth. Against the backdrop of recent pick-up in inflation, and growth seen in the region, a more confident economic outlook would be enough to continue lifting the cross further beyond the 0.8700 handle. 

Technical levels to watch

On a sustained move above the 0.8700 handle, the cross is likely to immediately dart towards 0.8720-25 resistance ahead of 0.8765-70 horizontal resistance. On the downside, 0.8660-55 region now seems to have emerged as immediate support, which if broken is likely to accelerate the slide towards 0.8640, en-route 100-day SMA important resistance break, now turned strong support near 0.8600 round figure mark.