EUR/GBP surrenders modest intraday gains, seems vulnerable near 0.8500 mark

• EUR/GBP struggled to capitalize on its modest intraday gains.
• Softer German GDP print held the euro bulls from placing bets.
• Improving COVID-19 situation in the UK further capped gains.

The EUR/GBP cross retreated few pips during the early European session and was last seen hovering near the lower end of its daily trading range, around the 0.8510 region.

Following the previous day's two-way/directionless price moves, the EUR/GBP cross managed to regain some positive traction on the last trading day of the week. The shared currency's relative outperformance was sponsored by the post-FOMC selling bias around the US dollar. That said, a combination of factors acted as a headwind for the cross and capped gains.

The preliminary report published by Destatis showed that the German economy expanded by 1.5% in the second quarter. This marked a notable rise from the 1.8% contraction recorded in the first quarter, though was well below consensus estimates pointing to a 2.0% growth. This, in turn, held the euro bulls from placing fresh bets around the EUR/GBP cross.

On the other hand, the declining trend in Delta variant infections continued underpinning the British pound and further collaborated to keep a lid on the EUR/GBP cross. Looking at the broader picture, the cross, so far, has struggled to register any meaningful recovery from multi-month lows and oscillating in a range over the past three trading sessions.

Friday's economic docket also highlights the release of the flash version of the Eurozone CPI and GDP figures, though is unlikely to provide any impetus to the cross. Nevertheless, the lack of buying interest clearly suggests that the near-term bearish trend is still far from being over and attempted recovery moves run the risk of fizzling out quickly.

Technical levels to watch