EUR/GBP moves away from Friday’s two-month highs

The EUR/GBP cross maintained its offered tone through early European session on Monday and moved on the brink of breaking below the 0.8700 handle.

Spot snapped three consecutive days of winning streak and has now reversed around 50-pips from over two-month highs near mid-0.8700s touched on Friday. Despite of the various polls on the upcoming UK general election that showed narrowing lead for May's Conservative party lead, a modest GBP recovery has been the main driver of the pair's corrective slide at the start of a new trading week. 

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Meanwhile, a subdued trading action around the EUR/USD major, ahead of the ECB President Mario Draghi's testimony the Economic and Monetary Affairs Committee did little to extend any support, with sentiment surrounding the British Pound acting as an exclusive driver of the pair's movement.

The UK markets would remain closed on Monday, in observance of the Spring Bank Holiday, and hence, traders are likely to refrain from building fresh positions amid holiday-thinned liquidity conditions, which could aggravate the pair's movement in either direction.

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Technical levels to watch

A follow through retracement below the 0.8700 handle, the cross is likely to accelerate the slide towards 0.8680-75 intermediate support before eventually dropping to test its next support near mid-0.8600s.

On the upside, 0.8725-30 area now seems to act as immediate hurdle and is closely followed by resistance near 0.8750 region. A convincing break through Friday's swing high now seems to lift the cross beyond 0.8785 horizontal resistance towards reclaiming the 0.8800 handle.