EUR/GBP surrenders early gains, retreats from 1-1/2 month tops post-UK PMI

   •  UK construction PMI breaks the recent string of disappointing UK data.
   •  Downside remains limited amid a modest EUR/USD recovery.

The EUR/GBP cross surrendered its early gains to fresh 1-1/2 month tops and has now retreated back to the 0.8800 handle post-UK data.

The cross initially built on previous session's up-move, led by disappointing UK manufacturing PMI, and touched an intraday high level of 0.8831, albeit struggled to build on the momentum. 

The up-move was capped by the British Pound's relative outperformance against its European counterpart and was further weighed down today's better-than-expected UK construction PMI, which broke the recent string of disappointing UK economic data.

The UK construction sector activity rebounded sharply in April, with the final Markit Purchasing Managers' Index (PMI) jumping to 52.5 points as compared to 47.0 in March and a reading of 50.5 anticipated.

It, however, remains to be seen if the current pull-back marks a near-term top or the dip is utilized to initiate some fresh long positions amid a modest rebound witnessed around the EUR/USD major.

Technical levels to watch

Any subsequent retracement is likely to find support near the 0.8775-70 region, below which the corrective slide could get extended towards 0.8715-10 horizontal support. On the upside, the 0.8820-30 region might continue to act as an immediate hurdle, which if cleared might trigger a fresh leg of up-move towards 0.8865-70 supply zone.