EUR/GBP fails ahead of 0.86, reverses Tuesday’s recovery gains post-UK PMI

The EUR/GBP pair's ongoing recovery move ran out of steam just ahead of the 0.8600 handle and has now reversed majority of its gains recorded in the previous session.

Spot met with fresh supply near the very important 200-day SMA hurdle after the key UK services sector recorded a stronger than expected growth in March. In fact, the Market's UK services PMI rose to 55.0 in from 53.3 in February and easily surpassing consensus estimates for a reading of 53.5. However, Markit said the upturn in March fails to change the view the U.K. economy slowed in the first quarter, but did little to distort strong bullish surrounding the British Pound. 

Meanwhile, a mildly offered tone around the shared currency further collaborated to the pair's reversal from multi-day tops. The recent headline pertaining to the ECB policymakers concern over market's misinterpretation of the central bank's monetary policy announcement in March continues to weigh on the shared currency and failed to assist the cross to build on to its recent recovery from sub-0.8500 level, over one-month lows touched last Friday. 

EUR/USD capped below 1.0700 amid tumbling German yields

Technical levels to watch

A follow through retracement below 0.8540 level would turn the pair vulnerable to head back towards retesting the key 0.85 psychological mark before eventually heading back to 0.8480-75 horizontal support.

On the upside, recovery back above 0.8575 level might continue to confront strong resistance near 0.8590-0.8600 region, (200-day SMA), above which a fresh bout of short-covering could lift the cross towards 0.8640-45 strong horizontal resistance.