EUR/GBP reverses 300-pips from GBP flash crash-led rally

The cross in the EUR/GBP retreated sharply from seven-year peaks, clocked in response to a collapse in the GBP across the board amid reports of a ‘fat finger’ error.

GBP dumped to multi-decade lows versus USD

The EUR/GBP pair now gains +1.26% to 0.8950, having hit fresh seven-year high at 0.9264 pre-Tokyo open. The main catalyst behind the recent rally in the cross is the ‘hard Brexit’ fears-driven downward spiral in the GBP.

Although the latest uptick is largely attributed to the comments from French president Hollande coinciding with a Fat finger error in the cable, as reported by Reuters. Hollande referred to the possibility of a hard Brexit in order to protect the future of the EU, according to a report in the Financial Times.

Meanwhile, all eyes remain on the US NFP figures, which may add to the market volatility and could trigger wild moves in both EUR and GBP.

EUR/GBP Levels to consider

The pair has an immediate resistance at 0.9000 (round figure) and from there to 0.9050 (psychological levels) and 0.9264 (7-year high) next. On the flip side, next supports are seen at 0.8900 (round number) and 0.8822 (5-DMA) below which it could extend losses to towards 0.8751 (daily S2).