EUR/GBP struggles to break through 0.8900 handle

The EUR/GBP cross continued gaining positive traction for the fourth consecutive session on Tuesday but struggled to decisively break through the 0.8900 handle.

The cross extended last week's sharp rebound from the 0.8700 neighborhood and is now holding comfortably above an important moving averages (100 & 200-day) confluence resistance near the 0.8850-55 region. Hence, today's strong up-move to near three-week tops could be primarily attributed to some follow-through technical buying following yesterday's bullish break through a key barrier. 

Meanwhile, the British Pound continues to be weighed down by the incoming softer UK economic data, especially the recent PMI figures for January. This along with the ongoing rout in global equity markets further supported the shared currency's funding status and remained supportive of the pair's strong up-move.

In absence of any major market moving economic releases, bulls are more likely to be inclined towards taking some profits off the table ahead of BOE's Super Thursday and thus, reduce the scope for any additional strong up-move from current levels. 

Technical levels to watch

Momentum beyond the 0.8900 handle is likely to get extended towards 0.8925 supply zone, above which the cross seems all set to aim towards conquering the key 0.90 psychological mark. 

On the flip side, the 0.8855-50 region now seems to protect the immediate downside, which if broken might turn the cross vulnerable to head back towards testing the 0.8800 handle.