EUR/GBP erases gains, dips below 0.8350

The EUR/GBP pair pared all of its disappointing UK retail sales-led gains to 0.8380 and turned back lower to currently trade back below 0.8350 level. 

The pair initially had a muted reaction after ECB announced to leave its monetary policy stance unchanged and held on to its early gains posted after UK data showed a monthly decline of 0.9% in retail sale in June. 

The cross, however, lost its strength after ECB President Mario Draghi reiterated the downward risks to the Euro-zone's economic and inflation outlook and clearly stated that the central bank is ready to use all instruments, if required.

Technical levels to watch

Below session through support near 0.8300 handle, also marking weekly low, the cross is likely to break below 0.8250 support (July 14 low) and immediately head towards testing 0.8200-0.8180 support (June 27-29 lows). On the flip side, 0.8427 (July 19 high) now turns immediate resistance, above which the cross seems to clear 0.8250 resistance (July 14 high) and head aim towards testing 0.8524 resistance (July 12 high).