EUR/GBP clings to strong gains near 3-week tops, around mid-0.8900s

The shared currency continues to outperform its British counterpart, lifting the EUR/GBP cross to over 3-week high level in the region of mid-0.8900s.

The cross built on previous session's bullish break through 0.8880-90 supply zone and traded with positive bias for the sixth consecutive session, despite the ongoing Catalonia crisis. 

The latest political developments in the UK, wherein media reports suggest that Theresa May is pressurized, from within the Conservative Party, to step down as Prime Minister, has been one of the key factors responsible for the British Pound's relative underperformance. 

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Meanwhile, the market seems to have largely ignored prospects for an eventual rate hike move by the BoE, with UK political uncertainty boosting the cross to its highest level since Sept. 14. 

In absence of any major market moving economic releases, either from Euro-zone or the UK, a follow through short-covering might continue to drive the cross higher on the last trading day of the week. 

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Technical levels to watch

Immediate resistance is pegged near 0.8980 level, above which the cross is likely to surpass the key 0.90 psychological mark and head towards testing its next hurdle near the 0.9040 region.

On the downside, any retracement back below 0.8930-25 zone now seems to find fresh buying interest near the 0.8900 handle and hence, is likely to limit any deeper losses near 0.8870 level.