EUR/GBP holds weekly bullish gap, but remains capped at 0.85 handle

The EUR/GBP cross struggled to extend the French election-led bullish gap further beyond the key 0.85 psychological mark and retreated few pips from multi-day tops. The cross was last seen changing hands around 0.8480 region. 

A sharp retracement of around 100-pips in the EUR/USD major, primarily led by risk-on rally in the US treasury bond yields, failed to assist the cross to build on early gains. Meanwhile, a softer tone surrounding the British Pound extended some support and helped the cross to regain some traction near mid-0.8400s. 

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With the pre-election polls anticipating Macron-Le Pen encounter in the second round, market now seems to price-in a clear win for Emmanuel Macron and hence, any immediate corrective slide would now be looked upon as fresh buying opportunity. 

On the economic data front, today's German Ifo business climate survey would now be looked upon for some fresh short-term trading impetus. There are no UK macroeconomic data due for release on Monday, with the sentiment surrounding the shared currency acting as an exclusive driver of the pair's movement at the start of a new trading week.

Technical levels to watch

On the downside, 0.8450 area now seems to have emerged as immediate support, below which the cross is likely to extend the corrective slide towards 0.8415-10 intermediate support ahead of 0.8380 level.

Meanwhile on the upside, bulls would be eyeing for a follow through buying interest beyond the 0.8500 handle, which if conquered has the potential to lift the cross further towards 0.8540-45 resistance en-route 0.8570 resistance.