EUR/GBP extends its slide, drops to 0.8250

A fresh bout of short-covering rally across GBP pair seems to have emerged, dragging the EUR/GBP cross further below 0.8300 to currently trade around mid-point of 0.8300-0.8200 handle.

Despite of the prevailing uncertainty over the economic implication of the Brexit referendum on the UK economy, the British Pound seems to get some respite at lower levels. However, additional recovery runs the risk of a sudden turnaround in investor sentiment on any further developments / news surrounding the UK's vote to end its membership with the European Union.

Markets now look forward to the oucome of UK PM David Cameron's meeting with other EU leaders and further comments from the second day of the EU council meeting. In the meantime, German Prelim CPI might also provide some momentum play for short-term traders.

Technical outlook

Efthivoulos Grigoriou, Head of Global Research and Analysis at JFD Brokers Ltd., notes, "The immediate resistance level is seen at 0.8370, which if the price surpasses above it will open the door for the psychological level of 0.8400, a previously suggested target. A successful attempt above the 0.8400 level would expose to 0.8580 barrier, after taking out the 0.8500."

"The daily chart shows that the price is now moving well above the three SMA’s (200-SMA, 100-SMA, 50-SMA), whilst the technical indicators hold in positive territory. The MACD oscillator still has a strong momentum while RSI is sloping downwards but is still near the overbought area."