EUR/GBP clings to strong recovery gains, but lacks follow through

• Snaps four consecutive days of losing streak amid easing EUR bearish pressure.
• Italian political development provides a much-needed respite to the EUR bulls.
• A weaker tone around GBP provides an additional boost and remains supportive.

The EUR/GBP caught some strong bids on Friday and reversed previous session's slide to near 4-week lows.

The cross stalled its recent downfall and found some support ahead of the 0.8700 handle on Thursday. The recovery attempted extended through the early European session on Friday and helped the cross to snap four consecutive days of losing streak.

Today's up-move could be attributed to easing bearish pressure surrounding the shared currency and the latest positive political development in Italy, which ended the impending political deadlock in one of the Euro-zone's larger economies.

This coupled with a mildly softer tone surrounding the British Pound remained supportive of the pair's strong up-move to an intraday high level of 0.8754, albeit lacked any strong follow-through momentum amid empty economic docket.

It, however, remains to be seen if the up-move is backed by any genuine buying interest or is solely led by some short-covering, especially after this week's fall of over 100-pips since the beginning of this week.

Technical levels to watch

On a sustained move beyond mid-0.8700s, the recovery movement is likely to get extended towards 0.8775-80 intermediate hurdle en-route the 0.8800 handle. On the flip side, 0.8725 level now seems to act as an immediate support, which if broken should pave the way for an extension of the pair's bearish trajectory.

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