EUR/GBP clings to data-led recovery gains, around mid-0.8400s

Having refreshed weekly low near 0.8410 region, the EUR/GBP cross staged a goodish recovery and is now placed just few pips away from session tops touched in the past hour. 

A slight disappointment from the prelim UK GDP figures helped the cross to regain traction and bounce off from the vicinity of 0.8400 handle. According to the first estimate, the UK economy is expected to grow 0.3% q-o-q, down from 0.7% growth reported in the previous quarter and lower than 0.4% growth expected. Meanwhile, the yearly growth ticked higher to 2.1% during the first quarter of 2017, but was still slightly below consensus estimates. 

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Adding to this, upbeat Euro-zone inflation numbers revived positive sentiment surrounding the shared currency and provided an additional momentum to the pair's recovery move. According to the flash estimates, the composite Euro-zone headline inflation, as measured by CPI, is expected to have risen by 1.9% y-o-y during April, while core CPI is seen rise to 1.2% during the same period. 

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A larger-than-expected rise in prices eased concerns over inflation outlook raised by the ECB President Mario Draghi, during the post meeting press conference on Thursday, and resulted into fresh buying interest around the shared currency. 

With macro data from the old continent out of the way, focus shifts to the US economic docket, which would have diverging effect on the shared currency and the British Pound, eventually providing some impetus for the EUR/GBP cross.

Technical levels to watch

On a sustained recovery back above 0.8465-70 immediate resistance, the cross is likely to head towards reclaiming the key 0.8500 psychological mark before heading back towards two-week highs resistance near 0.8530 level.

Meanwhile on the downside, 0.8425-20 region now becomes immediate support to defend, which if broken would turn the cross vulnerable to break below the 0.8400 handle and head towards testing 0.8385-80 support.