EUR/GBP rallies to nearly two-week high ahead of BoE's Bailey and ECB's Lagarde

• EUR/GBP gained strong positive traction on Thursday and rallied to a near two-week high.
• The overnight hawkish comments by the ECB policymaker underpinned the shared currency.
• Subdued action around the British pound did little to hinder the strong intraday positive move.

The EUR/GBP cross added to its strong intraday gains and jumped to a nearly two-week high, around the 0.8365 region during the first half of the European session.

Following the previous day's good two-way price moves, the EUR/GBP cross caught aggressive bids on Thursday and built on its recent bounce from mid-0.8200s, or the multi-week low touched on April 14. The European Central Bank (ECB) policymaker Martins Kazaks said on Wednesday that “a rate hike is possible as soon as July.” This comes on the back of the recent surge in the German 10-year benchmark yields to a level last seen in July 2015, near the 1.00% psychological mark on Tuesday, and underpinned the euro.

This, along with some repositioning trade ahead of ECB President Christine Lagarde's speech later this Thursday, contributed to the shared currency's relative outperformance. On the other hand, the British pound, so far, has struggled to gain any meaningful traction and further acted as a tailwind for the EUR/GBP cross. That said, concerns about the potential economic fallout from the ongoing war in Ukraine might hold back traders from placing aggressive bullish bets and keep a lid on any further gains for spot prices.

Traders will further take cues from the Bank of England Governor Andrew Bailey's appearance at the same event. Nevertheless, the mixed fundamental backdrop makes it prudent to wait for sustained move back above the 0.8400 round-figure mark before confirming that the EUR/GBP cross has bottomed out in the near term. This will set the stage for additional gains and allow bulls to aim back to challenge the very important 200-day SMA, currently around mid-0.8400s.

Technical levels to watch