• EUR/GBP struggles to capitalize on its modest intraday bounce from the 0.8600 mark.
• The BoE’s less hawkish signals undermine the GBP and act as a tailwind for the cross.
• Speculations that the ECB will soon pause its rate-hiking cycle caps gains for the Euro.

The EUR/GBP cross attracts fresh buying near the 0.8600 mark on Friday and stalls the overnight pullback from a nearly two-week high touched in the aftermath of the Bank of England (BoE) policy decision. Spot prices, however, struggle to capitalize on the modest intraday uptick, warranting some caution before positioning for an extension of this week's goodish bounce from  mid-0.8500s.

The British Pound's (GBP) relative underperformance could be attributed to the less hawkish signals from the BoE on Thursday, saying that the current monetary policy stance is "restrictive". The markets took this as an indication that the tightening cycle may be nearing an end and scaled back expectations for the peak rate. The outlook continues to undermine the GBP and lends some support to the EUR/GBP cross.

Traders, meanwhile, seem reluctant to place bullish bets around the shared currency in the wake of growing speculations that the European Central Bank (ECB) might also pause its historic hiking campaign soon. In fact, Fitch Ratings, in its latest report released this Friday, said that falling Eurozone inflation puts ECB rates peak within sight. This, in turn, is seen acting as a headwind for the EUR/GBP cross.

The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the recent corrective decline from the 0.8700 mark has run its course. Market participants now look to a scheduled speech by the BoE Chief Economist Huw Pill, which might influence the Sterling Pound and produce short-term opportunities around the EUR/GBP cross on the last day of the week.

Technical levels to watch