• EUR/GBP gains strong positive traction on Wednesday and rallies to over a one-week high.
• The stronger inflation figures from the Eurozone’s three biggest economies boost the Euro.
• A modest pickup in demand for the British Pound does little to hinder the strong move up.

The EUR/GBP cross catches aggressive bids on Wednesday and builds on the previous day's bounce from the vicinity of the 100-day SMA support near the 0.8755-0.8750 region, or a one-month low. The strong move up remains uninterrupted through the mid-European session and lifts spot prices to over a one-week top, around the 0.8875-0.8880 region in the last hour.

The shared currency's relative outperformance comes amid rising bets for additional jumbo interest rate hikes by the European Central Bank (ECB) in the coming months. The expectations were lifted by signs of rebounding inflation in France, Spain and Germany - the Eurozone's three biggest economies. This, in turn, lifts the yield on Germany’s rate-sensitive two-year bond to its highest level since the 2008 financial crisis.

Apart from this, a sharp US Dollar pullback from a multi-week high further boosts the Euro and provides a goodish lift to the EUR/GBP cross. A weaker Greenback, meanwhile, also benefits the British Pound, which remains supported by the latest optimism over the UK-EU agreement on the new Northern Ireland protocol. Adding to this, speculations for additional rate hikes by the Bank of England (BoE) could cap gains for the cross.

From a technical perspective, the EUR/GBP bulls have been showing resilience near the 100-day SMA and the subsequent move-up supports prospects for additional gains. Hence, some follow-through strength, back towards reclaiming the 0.8900 mark, now looks likely a distinct possibility. The momentum could get extended towards the 0.8950-0.8955 intermediate hurdle en route to the YTD peak, around the 0.8980 zone touched in February.