• EUR/GBP attracted some dip-buying on Friday and reversed a part of the overnight sharp pullback.
• The euro drew support from comments by ECB policymakers, hinting at a July interest rate hike.
• Concerns about the economic fallout from the Ukraine crisis held back bulls from placing fresh bets.

The EUR/GBP cross maintained its bid tone through the first half of the European session and was last seen hovering near the daily high, around the 0.8525 region.

Following the overnight turnaround from the 0.8615-0.8620 area, or the highest since September 2021, the EUR/GBP cross attracted fresh buying in the vicinity of the 0.8500 psychological mark on Friday. The shared currency's relative outperformance comes amid hawkish comments by ECB policymakers, hinting toward a July interest rate hike.

On the other hand, the British pound was pressured by Thursday's softer UK macro data, which reaffirmed a bleak economic outlook and suggested that the Bank of England's rate hike cycle could be nearing a pause. This was seen as another factor that acted as a tailwind for the EUR/GBP cross, though the uptick lacked bullish conviction.

Concerns that the Eurozone economy would suffer the most from the Russia-Ukrain war held back bulls from placing aggressive bets around the EUR/GBP cross. In the latest developments, Ukraine announced that it would suspend Gazprom gas transit on its territory. Separately, Finland confirmed that it would apply to join NATO "without delay".

Sweden is also expected to follow suit amid security concerns after Russia invaded Ukraine. The Kremlin reacted by warning it will be forced to take retaliatory “military-technical” steps. Given its proximity, investors remain worried about the spillover effect might prevent the European Central Bank from lifting interest rates.

From a technical perspective, the emergence of some dip-buying near a descending trend-line resistance breakpoint, now turned support, favours bullish traders. The mixed fundamental backdrop, however, warrants some caution before positioning for any firm near-term direction amid absent relevant market moving economic releases.

Technical levels to watch