EUR/GBP trades with modest losses around 0.8600 mark, bears lack conviction.

EUR/GBP drifts lower and snaps a four-day winning streak to a multi-month peak.
The upbeat German Industrial Production data lends support and helps limit losses.
This week’s breakout through the crucial 200-day SMA hurdle favors bullish traders.

The EUR/GBP cross comes under some selling pressure on Wednesday and erodes a part of the previous day’s strong move up back closer to a three-month peak touched earlier this week. Spot prices, however, recover a few pips from the daily low and trade with modest intraday losses, around the 0.8600 mark during the early part of the European session.

The shared currency attracted some buyers following the release of German Industrial Production data, which showed that the output in the Eurozone’s top economy increased by 1.4% MoM. The reading was better than the expected increase of 1.0% and a 2.5% drop registered in May, which, in turn, acts as a tailwind for the EUR/GBP cross. The upside, however, remains capped in the wake of the European Central Bank’s (ECB) downbeat view of the Eurozone’s economic prospects and overbought conditions on the daily chart.

Apart from this, a modest technical bounce in the British Pound (GBP) contributes to capping the EUR/GBP cross, which, for now, seems to have stalled a strong rally witnessed over the past four days. Meanwhile, any meaningful corrective decline still seems elusive amid the Bank of England’s (BoE) first interest rate cut in more than four years, from a 16-year high to 5.0% last Thursday. This, in turn, makes it prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near term.

There isn’t any relevant market-moving economic data due for release, either from the UK or Eurozone, for the rest of the week. Hence, the focus shifts to the monthly jobs report and the latest consumer inflation figures from the UK, due next Tuesday and Wednesday, respectively. Apart from this, the monthly UK GDP print on Thursday should provide some meaningful impetus to the EUR/GBP cross. From a technical perspective, Monday’s breakout through the very important 200-day Simple Moving Average (SMA) favors bullish traders.