EUR/GBP remains depressed below 0.8600 mark, moves little post-UK jobs data

• EUR/GBP edged lower on Tuesday and extended the overnight pullback from one-week tops.
• Upbeat UK employment details added to the optimistic outlook and underpinned the sterling.
• Sustained USD selling bias benefitted the euro and helped limit the downside, at least for now.

The EUR/GBP cross maintained its offered tone near three-day lows, below the 0.8600 mark and had a rather muted reaction to the latest UK macro releases.

The cross extended the previous day's sharp pullback from one-week tops, around the 0.8630 region and remained depressed for the second consecutive session on Tuesday. The optimistic outlook for the UK economic recovery from the pandemic – amid the gradual easing of lockdown restrictions – was seen as a key factor behind the British pound's relative outperformance against its European counterpart.

The market expectations were reaffirmed by the latest UK monthly employment details, which showed that the jobless rate unexpectedly edged lower to 4.8% during the three months to March. Adding to this, the claimant count change showed a surprise drop of 15.1K in April. This was well below consensus estimates pointing to an increase of 25.6K and the previous month's revised reading of -19.4K.

On the other hand, the shared currency was supported by the prevalent selling bias surrounding the US dollar. This, in turn, extended some support to the EUR/GBP cross and helped limit any further losses, at least for now. Market participants now look forward to the release of the flash version (second estimate) of the first quarter Eurozone GDP print, which is expected to show a contraction of 0.6%.

Technical levels to watch