EUR/GBP remains below 0.8600 mark, move beyond 200-DMA awaited

• EUR/GBP was seen consolidating its recent gains to over two-month tops.
• Dovish BoE, Brexit worries continued acting as a headwind for the sterling.
• Stronger USD weighed on the euro and kept a lid on any meaningful gains.

The EUR/GBP cross seesawed between tepid gains/minor losses through the first half of the European session and was last seen hovering in the neutral territory, around the 0.8570-75 region.

The cross consolidated last week's dovish Bank of England-inspired strong rally to over two-month tops, with bulls still awaiting a sustained move beyond the very important 200-day SMA. The BoE surprised investors and decided to hold interest rates steady. This comes amid worries that the UK government will trigger Article 16 of the Northern Ireland Protocol, which turned out to be a key factor behind the British pound's relative underperformance.

Meanwhile, the shared currency struggled to gain any traction amid a pickup in the US dollar demand. This, in turn, failed to impress bullish traders or provide any meaningful impetus to the EUR/GBP cross, which, so far, has been capped below the 0.8600 mark. Hence, it will be prudent to wait for a strong follow-through buying before positioning for any further appreciating move amid absent relevant market-moving economic releases, either from the Eurozone or the UK.

From a technical perspective, acceptance above the 200-DMA and a subsequent strength beyond the 0.8600 mark will set the stage for additional gains. The EUR/GBP cross might then surpass an intermediate hurdle near the 0.8635 horizontal zone and aim to test September monthly swing highs, around the 0.8655-60 region. The momentum could further get extended towards reclaiming the 0.8700 round-figure mark.

Technical levels to watch