EUR/GBP bulls making a fresh attempt to build on momentum beyond 0.8600 mark

• EUR/GBP regained positive traction on Tuesday amid a pickup in demand for the euro.
• COVID-19/Brexit woes kept the GBP bulls on the defensive and remained supportive.

The EUR/GBP cross rallied around 20-25 pips during the early European session and jumped back above the 0.8600 round-figure mark in the last hour.

Following the previous day's good two-way price swings, the EUR/GBP cross regained positive traction on Tuesday and was supported by a modest pickup in demand for the shared currency. A fresh leg down in the US Treasury bond yields kept the US dollar bulls on the defensive. This, in turn, was seen as a key factor that benefitted the euro.

On the other hand, the British pound extended its subdued/range-bound price action amid concerns about the EU-UK stand-off on the Northern Ireland protocol. Apart from this, the UK government's decision to delay the final stage of easing lockdown measures from June 21 to July 19 further acted as a headwind for the sterling.

Meanwhile, the market reacted little to mostly upbeat UK jobs data, which showed that the unemployment rate dropped to 4.7% in April – in line with market expectations – from the 4.8% previous. This was accompanied by stronger wage growth data and a further drop in the number of people claiming unemployment-related benefits.

It will now be interesting to see if the EUR/GBP cross is able to capitalize on the positive move or once again meets with some fresh supply near a short-term descending trend-line resistance. The mentioned barrier is pegged near the 0.8625-30 region, which if cleared will be seen as a fresh trigger for bullish traders.

Market participants now look forward to a scheduled speech by the Bank of England Governor Andrew Bailey. Apart from this, Brexit-related headlines might influence the GBP and allow traders to grab some short-term opportunities around the EUR/GBP cross.

Technical levels to watch