EUR/GBP recovers to 0.7620 ahead of German CPI

The EUR/GBP pair has managed to stage a minor recovery from sub-0.7600 level touched earlier during Asian session to currently trade at session high, near 0.7620, amid thin liquidity in view of a bank holiday in UK.

Trading around the EUR/GBP cross is led by sentiment surrounding the EUR/USD major as investors await for the preliminary release of German CPI print for the month of May. 

During the month of May, the pair has lost over 2.5% on receding ‘Brexit’ fear that has been the key factor attributing to the relative outperformance of the British Pound. With less than a month remaining for the critical EU referendum, trading sentiment around GBP pair would continue to be driven by expectations of the outcome and its implication on the UK economy.

Moreover, the shared currency has also has also been dragged lower against the US counterpart on rising expectations of an imminent Fed rate-hike, eventually triggering a sharp fall in the EUR/GBP cross.

The pair, however, now seems to find some support near 0.7600 handle and could gain further traction on some encouraging data from the Euro-zone. 

Technical levels to watch

From current levels, sustained move above 0.7625 level seems to boost the pair immediately towards 0.7660-65 resistance area, which if conquered should assist the pair to reclaim 0.7700 handle. 

On the flip side, reversal from current levels and a sustained weakness below 0.7600-0.7580 region is likely to increase the pair's vulnerability to drop towards testing the very important 200-day SMA support near 0.7525 region.