EUR/GBP holds tepid recovery gains above 0.8500 handle after UK PMI

The EUR/GBP cross held on to tepid recovery gains to 0.8510-15 region but failed to gain fresh tracton following the release of disappoingint UK construction PMI print. 

According to the data released just a while ago, UK construction PMI fell short of expectations and dropped to 52.2 in January as compared to previous month's 54.2 and 53.8 expected. 

Today's reading failed to add on to Wednesday's in-line manufacturing PMI, albeit indicated continous expansion despite of Brexit concerns and remained supportive for the British Pound.

Meanwhile, strong bid tone around the EUR/USD pair was also seen lending some support and collaborating towards mild recovery staged on Thursday. 

Looking ahead, the BoE's Quarterly Inflation Report, which would be accompanied by monetary policy decision, would remain a key determinant for the pair's near-term trajectory. Also in focus would be ECB President Mario Draghi's speech, which might trigger some short-term trading impetus.

Technical levels to watch

A follow through buying interest above 0.8525 level could lift the cross towards 0.8545 resistance ahead of 0.8580 horizontal level. On the flip side, sustained weakness below 0.8500 psychological mark has the potential to drag the cross back towards multi-week lows support near 0.8470 region before eventually taking it to Jan. monthly lows support near 0.8450 level.