EUR/GBP hits a 4-week high, taps 0.8600 handle

After an initial dip to 0.8563 level, the EUR/GBP cross recovered all of its lost ground and jumped to hit a fresh four-week high level session high level of 0.8600 handle for the first time since August 23.

The cross on Monday was seen consolidating after last week's strong up-move for second consecutive week amid broad based US Dollar weakness, which remained on the back foot on diminishing prospects of an eventual Fed rate-hike action on Wednesday and supported recovery in the EUR/USD and the GBP/USD majors. 

On Tuesday, the shared currency maintained its near-term outperformance against the British Pound and shrugged-off disappointing release of Euro-zone PPI for the month of August. 

In absence of any major market moving releases either from Euro-zone or UK, the cross remains at the mercy of broader sentiment surrounding the greenback that would drive demand for the shared currency and the British Pound, eventually providing some impetus for the EUR/GBP cross. 

Technical levels to watch

Move above 0.8600 handle is likely to confront immediate resistance at 0.8629 (August 23 high) above which the cross is likely to head towards its next major resistance near 0.8660 level. On the downside, 0.8580 level, followed by 0.8560 (near session low), now becomes immediate support to watch for. Failure to hold these immediate support levels now seems to drag the cross below 0.8535-30 support area back towards retesting 0.8500 psychological mark support.