EUR/GBP digesting strong up-move to multi-month highs

Having risen to a fresh 2016 highs, the EUR/GBP cross is now consolidating its strong gains back above 0.8700 handle.

Currently trading around 0.8725 region, the cross jumped to the highest level since August 2013 amid intense selling pressure surrounding the British Pound after British Prime Minister Theresa May pledged to trigger Article 50 by the end of first quarter of 2017 and formally begin the process of ending UK's association with the European Union. 

Meanwhile, the release of surprisingly stronger UK manufacturing PMI print provided a much needed respite for the sterling and restricted further upside. The final UK manufacturing PMI for September came-in at 55.4 as against expected drop to 52.1 from 53.3 recorded in August. 

In absence of any fresh economic releases either from UK or from the Euro-zone, the cross would continue to react to any fresh news-flow surrounding the historic Brexit referendum.

Technical levels to watch

A follow through buying interest above multi-month high resistance near 0.8747, the cross is likely to extend its near-term bullish trajectory and head towards testing July monthly high resistance near 0.8770 region before attempting to reclaim 0.8800 handle.

Meanwhile on the downside, corrective move back below 0.8700 handle could get extended but is likely to be limited at an important resistance turned support near 0.8660 region. Only a decisive break below 0.8660 support might negate the near-term bullish outlook and turn the cross vulnerable to extend its corrective move.