EUR/GBP surges closer to mid-0.8700s post-UK GDP

   •  Dismal UK GDP growth figures prompt aggressive GBP selling in the last hour.
   •  Dovish ECB outlook weighing on the common currency and could cap further gains.

The EUR/GBP cross rallied around 50-pips and surged to an intraday high level of 0.8744 following disappointing UK GDP growth figures. 

The British Pound weakened across the board after the preliminary UK GDP print fell short of expectations and showed q-o-q growth of 0.1% during the first quarter of 2018 as against 0.4% anticipated. The yearly rate also missed expectations and came in at 1.2% vs. 1.4% expected. 

Against the backdrop of last week's dovish surprise by the BOE Governor Mark Carney, yet another dismal UK macro data further dampened BOE rate hike expectations and prompted some aggressive GBP selling in the last hour. 

With today's strong up-move, the cross has now reversed majority of Thursday's post-ECB retracement slide, albeit further gains are likely to be capped amid an offered tone surrounding the shared currency.

Investors now look forward to the BOE Governor Mark Carney's scheduled speech, which might now act as a key determinant of the sentiment surrounding the GBP until next MPC meeting on May 10.  

Technical levels to watch

Any subsequent up-move is likely to confront resistance near the 0.8770-75 region, above which the cross is likely to make a fresh attempt towards conquering the 0.8800 handle. On the flip side, 0.8720-15 area now seems to protect the immediate downside and is followed by support near the 0.8700 handle.