• EUR/GBP witnessed a modest intraday pullback from seven-week tops.
• The set-up still supports prospects for the emergence of some dip-buying.
• A sustained break below mid-0.8800s needed to negate the bullish bias.

The EUR/GBP cross extended its steady intraday pullback from over seven-week tops and was last seen trading near the lower end of its daily trading range, around the 0.8900 round-figure mark.

Slightly overbought conditions seemed to be the only factor that prompted some profit-taking amid a modest bounce in the sterling, albeit the bias still seems tilted in favour of bullish traders.

The cross on Friday broke through a 1-1/2-month-old range. The subsequent move beyond a resistance marked by 23.6% Fibonacci level of the 0.9500-0.8671 fall added credence to the bullish breakout.

Moreover, bullish technical indicators on the daily chart are still far from being in the overbought territory and support prospects for the emergence of some dip-buying at lower levels.

Hence, some follow-through weakness below the 0.8900 mark might still be seen as a buying opportunity, which should help stall the slide near the 0.8875 support area (23.6% Fibo. level).

The cross seems poised to build on its recent bounce from sub-0.8700 levels and aim towards the next major hurdle near the 38.2% Fibo. level, just ahead of the key 0.9000 psychological mark.

That said, a convincing breakthrough the 0.8875 level, leading to a subsequent fall below mid-0.8800s will negate the constructive outlook and turn the cross vulnerable to slide further.

EUR/GBP daily chart

Technical levels to watch