• EUR/GBP picks up bids to reverse early Asian session losses.
• Bulls stay hopeful on concerns that record EU inflation could push ECB’s Lagarde to repeat her hawkish bias.
• Eurozone job numbers, German Retail Sales and risk catalysts are extra factors to watch for clear directions.

EUR/GBP licks its wounds around 0.8515 heading into Wednesday’s London open as the Euro gains upside momentum ahead of the key data/events. Also underpinning the cross-currency pair’s latest rebound could be the cautious optimism in the market.

Tuesday’s record high Eurozone Harmonised Index of Consumer Prices (HICP) highlights today’s speech from European Central Bank (ECB) President Christine Lagarde, considering the recently hawkish bias of the bloc’s policymakers. Also important are figures relating to Germany’s Retail Sales for April, expected 4.0% YoY versus 2.7% prior, as well as Eurozone Unemployment Rate for the said month, anticipated to ease to 6.7% from 6.8%.

It’s worth noting that the improvement in market sentiment, especially after an upbeat performance in May, also propels the EUR/GBP prices of late.

Underpinning the market’s cautious optimism are mixed concerns over the Fed’s next moves after US Treasury Secretary Janet Yellen and President Joe Biden praised Fed Chairman Jerome Powell while altering their bias towards inflation.

Also, better-than-expected Australia GDP and China PMI numbers favor the market’s firmer sentiment and help EUR/GBP to consolidate recent losses.

Additionally, agitations over UK PM Boris Johnson’s party during the covid-led lockdowns join the disappointment of British business leaders over the Northern Ireland Protocol (NIP) to weigh on the GBP/USD prices. On the same line are the doubts over the Bank of England’s (BOE) role in taming inflation. “In a downbeat assessment of the UK’s economic prospects, the impact of Brexit and the potential ‘politicization’ of monetary policy, the US investment bank (Bank of America) believes that investors will dump the pound after sustained weakness,” per The Times.

To sum up, EUR/GBP buyers brace for further upside but it all depends upon the scheduled catalysts and risk factors for now.

Technical analysis

Tuesday’s Dragonfly Doji bullish candlestick joins the EUR/GBP pair’s sustained trading beyond the 21-DMA, around 0.8510 by the press time, keeping the pair buyers hopeful to aim for a three-week-old resistance line near 0.8560.