EUR/GBP extends recovery momentum ahead of ECB decision

The EUR/GBP cross is seen building on to Wednesday's recovery move back above 0.8400 handle and has now jumped to fresh weekly high as traders now turn their attention to ECB decision due later today.

Currently trading around 0.8435-40 band, the pair recovered back above 50-day SMA after Wednesday's release of weaker-than-expected UK manufacturing production data helped the cross to shrug-off disappointing German industrial production data and end its six days of losing streak.

The cross extended its recovery momentum on Thursday as investors now shift their focus to this week's key event risk, ECB monetary policy decision. The central bank is widely expected to stand pat but the main focus would be on the subsequent press conference, where dovish comments ECB President Mario Draghi should trigger a fresh leg of downslide for the cross.

Technical levels to watch

A follow through buying interest above 0.8450 level seems to assist the pair towards 0.8465-70 strong horizontal resistance above which the pair is likely extend its recovery trend beyond 0.8500 psychological mark towards its next major resistance near 0.8515 area. On the flip side, 100-day SMA near 0.8400 region seems to act as immediate support. Sustained weakness back below 100-day SMA, and a subsequent break below 0.8350 support, now seems to turn the pair vulnerable to extend its near-term corrective move and head towards testing 0.8325 intermediate support before eventually dropping to test 0.8300 round figure mark.