EUR/GBP recovery gains momentum; reclaims 0.8700 handle

The British Pound underperformed its European counterpart, with the EUR/GBP cross reversing part of Tuesday's sharp reversal from levels beyond 0.8800 handle.

A profit taking slide around GBP/USD major, following Tuesday's massive up-surge of over 300-pips in wake of UK PM Theresa May's Brexit speech, seem to be the only factor helping the pair's recovery from 6-day low near 0.8625 region. The cross was already trading higher and the recovery move was unaffected by stronger-than-expected UK jobs data but got some boost from in-line with estimate final Euro-zone CPI print. 

From technical perspective, Tuesday's plunge resulted into extremely oversold conditions on one hourly chart and warranted a technical bounce. The cross maintained its bid tone through the European session and is currently trading near session peak level around 0.8700 handle.

Technical levels to watch

The ongoing recovery momentum is likely to confront resistance near 0.8720-25 area, which if cleared has the potential to lift the cross back towards 0.8765 resistance area ahead of 0.8800 round figure mark. On the downside, 0.8665 level now becomes immediate support, which if broken seems to drag the cross back towards 0.8625 support, en-route 0.8600 handle.