EUR/GBP climbs to fresh weekly high, bulls flirt with 0.8865-0.8875 strong resistance

• EUR/GBP scales higher for the third straight day and touches a fresh weekly high on Wednesday.
• Dovish BoE expectations weigh on the British Pound and remain supportive of the momentum.
• The recent hawkish ECB rhetoric underpins the Euro and supports prospects for additional gains.

The EUR/GBP cross builds on its goodish rebound from over a two-week low and gains some follow-through traction for the third successive day on Wednesday. The momentum lifts spot prices to a fresh weekly high during the mid-European session, with bulls now eyeing a breakout through the 0.8865-0.8875 supply zone.

The British Pound continues with its relative underperformance, which, along with a modest uptick in the shared currency, acts as a tailwind for the EUR/GBP cross. A bleak outlook for the UK economy has been fueling speculations that the Bank of England (BoE) is nearing the end of the current rate-hiking cycle. This, in turn, is seen as a key factor undermining the Sterling.

Furthermore, hawkish rhetoric from several European Central Bank (ECB) policymakers benefits the Euro and further lends support to the EUR/GBP cross. In fact, the ECB governing council member Robert Holzmann said on Wednesday that rates will have to rise significantly further to reach levels that are sufficiently restrictive to ensure a timely return of inflation to target.

In the absence of any relevant market-moving economic releases, either from the UK or the Eurozone, the fundamental backdrop supports prospects for a further near-term appreciating move. Bulls, however, might wait for a sustained move beyond the 0.8865-0.8875 hurdle before placing fresh bets. The EUR/GBP cross might then aim to reclaim the 0.9000 psychological mark in the near term.

Technical levels to watch