EUR/GBP climbs to two-week tops, looks to build on momentum beyond 0.8600

• A weaker sterling assisted EUR/GBP to regain positive traction on Wednesday.
• The upside seems limited ahead of the BoE meeting and German election this week.
• Strength beyond monthly tops should pave the way for a move to the 0.8570 area.

The EUR/GBP cross climbed to fresh two-week tops during the early European session, with bulls now awaiting a sustained move beyond the 0.8600 round-figure mark.

The cross regained traction on Wednesday and is now looking to build on its recent bounce from the key 0.8500 psychological mark, or near one-month lows touched last week. The British pound's relative underperformance lacked any obvious fundamental catalyst and could be solely attributed to some repositioning trade ahead of the FOMC policy decision.

On the other hand, a subdued US dollar price action acted as a tailwind for the shared currency, which, in turn, extended some support to the EUR/GBP cross. That said, the upside seems limited as investors might refrain from placing aggressive bets heading into this week's key event risk – the BoE meeting on Thursday and the German federal election on Sunday.

Hence, any subsequent positive move is more likely to confront stiff resistance and remain capped near the monthly swing highs, around the 0.8615 region. This, in turn, warrants some caution for aggressive bullish traders and positioning for any further gains amid absent relevant market-moving economic releases, either from the Eurozone or the UK.

From a technical perspective, some follow-through buying beyond the mentioned barrier will set the stage for additional gains. The EUR/GBP cross might then accelerate the momentum and climb further towards challenging the 0.8670 supply zone before eventually aiming to reclaim the 0.8700 round-figure mark.

Technical levels to watch