EUR/GBP retreats from 1-1/2 month high, back below 0.86 ahead of macro data

The shared currency continues to outperform its British counterpart, with the EUR/GBP cross surging through the 0.8600 handle to hit its highest level since late March.

Spot continued gaining traction for the fifth consecutive day and built on last week's sharp recovery move from sub-0.8400 level. Tuesday's Euro-zone growth numbers and German ZEW survey lifted the shared currency across the board, while higher-than-expected UK inflation figures failed to benefit the British Pound, resulting into continuation of the pair's near-term upward trajectory.

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The cross, however, has trimmed some of its early gains and has slipped back below the 0.8600 handle as traders now look forward to important macro releases from the UK and Euro-zone - UK monthly employment details and followed by final Euro-zone CPI print. 

With sentiment surrounding the common currency already seems to have turned bullish, a slight disappointment from the UK jobs report could trigger a fresh leg of up-move for the cross. Meanwhile, the Euro-zone CPI, which is expected to match preliminary reading, would do little to stall the pair's ongoing upward trajectory.

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Technical levels to watch

On a sustained strength above the 0.8600 handle, leading to a subsequent momentum beyond 0.8615 level (session top), is likely to lift the cross towards 0.8650 resistance area ahead of 0.8675-80 horizontal resistance. Alternatively, retracement below 0.8575-70 immediate support could trigger a profit taking slide towards 0.8530 horizontal support en-route the key 0.85 psychological mark.