EUR/GBP SITS NEAR ONE-MONTH TOPS, BULLS AWAIT A MOVE BEYOND 0.8600 MARK

• EUR/GBP attracted some dip-buying and touched a one-month high on Monday.
• Bulls seemed rather unaffected by the mixed release of Eurozone PMIs for August.
• Weaker USD benefitted the sterling and might hold bulls from placing fresh bets.

The EUR/GBP cross was seen hovering near one-month tops during the early European session, with bulls now awaiting a sustained move beyond the 0.8600 mark.

The cross attracted some dip-buying near the 0.8570 region on Monday and is now looking to build on its recent strong rebound from mid-0.8400 or the lowest level since February 2020. The British pound’s relative underperformance comes amid worries that job losses in the UK will rise after the furlough scheme ends in September.

This, along with last week’s softer UK consumer inflation figures and Retail Sales data, dashed hopes for a rate hike from the Bank of England in the near future and continued undermining the sterling. Apart from this, some follow-through recovery in the shared currency acted as a tailwind for the EUR/GBP cross and remained supportive.

Bulls seemed rather unaffected by mixed Eurozone PMI prints, though the ongoing US dollar profit-taking slide benefitted the GBP and capped any further gains for the EUR/GBP cross. According to the flash estimate, the German Manufacturing PMI fell to 62.7 in August as compared to the previous month’s upwardly revised reading of 65.9.

Meanwhile, the gauge for the services sector in the region’s largest economy eased to 61.5 during the reported month from 61.8 previous, though was better than the 61.0 estimated. Separately, the Eurozone Manufacturing PMI fell to its weakest in six months and arrived at 61.5 in August as against the 62.0 anticipated and 62.8 last.

Hence, it will be prudent to wait for some follow-through buying before positioning for any further appreciating move for the EUR/GBP cross. Next on tap will be the release of the flash version of UK Manufacturing and Services PMIs, which might influence the GBP and produce some short-term trading opportunities around the cross.