EUR/GBP holding comfortably above 0.8600 handle

Having posted a session low at 0.8585 level, the EUR/GBP cross regained traction and moved close to a two-week high touched on Monday.

Currently trading around 0.8630 region, a risk-off mood in French bonds took a breather and triggered the initial leg of recovery move from session low. Adding to this, a fresh wave of selling pressure around the British Pound provided an additional boost and lifted the cross further beyond 0.8600 handle. 

The British Pound remained under some selling pressure on Tuesday against the backdrop of poor UK data (Halifax HPI) and the BRC January survey, highlighting a -0.6% m/m drop in like-for-like sales. Moreover, last week's dovish comments from BoE and cautiousness ahead of Wednesday's House of Commons vote on the Brexit legislation also undermined the British Pound.

However, an offered tone around the shared currency, amid political uncertainty of its own, capped additional up-move for the cross, at least for the time being.

Technical levels to watch

Momentum above two week high resistance near 0.8640 level is likely to confront resistance at 100-day SMA near 0.8655 region above which the cross is likely to accelerate the up-move towards 0.8680 area (Jan. 19 high) ahead of 0.8700 round figure mark.

On the flip side, 0.8620 level now seems to protect immediate downside, which if broken is likely to drag the cross back below 0.8600 handle towards its next support near 0.8565 region.