EUR/GBP clings to gains above 0.87 mark despite of strong UK PMI

The British Pound underperformed against its European counterpart, with the EUR/GBP cross holding daily gains near 0.8720 region following the release of UK construction PMI.

Spot had a muted reaction to today’s release of upbeat UK macro data that showed strong business activity in the UK construction sector. In fact, the final Markit UK construction PMI print surpassed even the most optimistic and jumped to a 17-month high level of 56.0 in May.

Against the backdrop of Thursday’s better-than-expected manufacturing PMI, today’s strong data again did little to provide any boost to the British Pound as investors preferred to remain on the slide-lines ahead of next week’s crucial UK general election.

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Meanwhile, a mildly positive sentiment surrounding the shared currency helped the cross to reverse previous session's corrective slide from 2-1/2 month highs.

Technical levels to watch

Bulls would be eyeing for a sustained break through mid-0.8700s strong hurdle, above which a bout of short-covering now seems to lift the cross beyond 0.8770-75 intermediate resistance towards reclaiming the 0.8800 handle. On the downside, retracement back below the 0.8700 handle, leading to a subsequent break below 0.8685 level (yesterday's low), now seems to drag the cross back towards retesting weekly lows support near 0.8660-55 region.