EUR/GBP stalls post-UK PMI up-move, retreats from tops

   •  Disappointing UK manufacturing PMI prompts fresh GBP selling on Tuesday. 
   •  The ongoing slide in the EUR/USD major seemed to help limit further downside.

The EUR/GBP cross struggled to build on its UK data-led up-move and quickly retreated around 20-25 pips from levels just above the 0.8800 handle.

The cross caught some strong bids during the early European session after the latest UK manufacturing PMI showed activity decelerated more than expected and dropped to the lowest level in 17-months. 

Today's weaker PMI print added to the recent string of disappointing UK macro data and further dampened prospects of May BOE rate hike, prompting some fresh selling around the British Pound.

Further gains, however, remained capped amid weaker tone surrounding the EUR/USD major, which continues to be weighed down by last week's dovish ECB outlook and resurgent US Dollar demand. 

With European markets closed in observance of Labor Day, relatively thin liquidity conditions might now lead to a subdued/range-bound price action ahead of Wednesday's releases of the final EZ PMI figures and UK construction PMI.

Technical levels to watch

The 0.8760 level now seems to act as an immediate support, which if broken might prompt some additional weakness further towards 0.8720 area en-route the 0.8700 handle. On the upside, bulls might be eyeing for a sustained move beyond the 0.8800 handle, above which the cross could head back towards testing the 0.8830-35 supply zone.