EUR/GBP eases from tops, up little around 0.8560-55 region

• EUR/GBP gained positive traction on Monday and snapped two days of the losing streak.
• Rising inflationary pressure in the Eurozone continued underpinning the shared currency.
• The UK fuel crisis acted as a headwind for the British pound and provided a modest lift.

The EUR/GBP cross maintained its bid tone through the first half of the European session, albeit has retreated few pips from daily tops and was last seen hovering near around the 0.8560 region.

The cross stalled last week's retracement slide from over two-month tops and attracted some buying near the 0.8540 area on the first day of a new trading week. The uptick assisted the EUR/GBP cross to snap two consecutive days of the losing streak and was sponsored by a modest pickup in demand for the shared currency.

Despite the risk-off mood, the US dollar struggled to preserve its intraday gains and moved further away from the highest level since September 2020 touched last week. This, in turn, provided a modest lift to the euro, which remained well supported by signs of increasing inflationary pressures in the Eurozone.

The flash consumer inflation report released on Friday showed that the headline CPI in the region likely accelerated to a 3.4% YoY rate in September from 3.0% previous. Adding to this, core CPI is seen rising to 1.9% YoY from 1.6% YoY in August, deepening concern among policymakers amid a record run in energy prices.

On the other hand, the British pound's relative underperformance comes amid the increasing fuel crisis in the United Kingdom. This, along with renewed tensions between Britain and France over post-Brexit fishing rights, further acted as a headwind for the sterling and provided a minor lift to the EUR/GBP cross.

It, however, remains to be seen if bulls are able to capitalize on the move or refrain from placing any aggressive bets amid absent relevant market moving economic releases. This makes it prudent to wait for a sustained move back above the 0.8600 mark before placing fresh bullish bets around the EUR/GBP cross.

Technical levels to watch