EUR/GBP erases recovery gains, flat at 0.7700 ahead of German ZEW

The EUR/GBP cross trimmed its earlier bounce gains to 0.7744 and is currently trading back close to 0.7700 handle ahead of the scheduled release of German ZEW Economic Sentiment for June.

The British Pound continues to gain traction as the latest Brexit polls added to recent bullish sentiment surrounding the possibilities of the UK remaining with the EU. The shared currency relatively underperformed the British Pound, dragging the EUR/GBP cross sharply lower on Monday. The cross last week witnessed a sharp reversal from the vicinity of 0.8000 psychological mark and extended its slide on Monday for fourth consecutive day.

Going forward, sentiment surrounding Thursday's Brexit might continue to grab headlines while investors take some trading cues from today's release of German ZEW economic sentiment, which is expected to drop for second consecutive month and come-in at 5.1 as compared to 11.2 and 6.4 recorded in April and May respectively.

Technical levels to watch

From current level, sustained weakness below 0.7700 handle has the potential to drag the pair immediately towards 0.7665-60 support, which if broken should open room for a retest of the very important 0.7600 round figure mark support. Meanwhile on the upside, recovery momentum above 0.7745-50 session high resistance is likely to gain traction and seems to assist the pair to move back above 0.7800 handle. A follow through buying interest above 0.7800 level has the potential to boost the pair further towards its next major resistance around 0.7855-60 zone, which now seems to cap any further near-term recovery for the pair.