EUR/GBP flirting with 0.8600 handle ahead of UK jobs data

The EUR/GBP cross was seen struggling for a firm direction and has been confined within a narrow trading range ahead of UK jobs data.

Currently trading around 0.8600 region, the cross on Tuesday faced rejection from just above 0.8700 handle and reversed majority of disappointing UK CPI-led gains. On Wednesday, broad based greenback retracement assisted both the EUR/USD and the GBP/USD majors to stage a recovery and has failed to provide any impetus for the EUR/GBP cross.

Market participants also await for the release of monthly employment details from UK before initiating any fresh trading positions. Consensus estimates point that the number of people claiming unemployment-related benefits increased by 2.3K in October, while Average Earnings for the three months to September is expected to have grown by 2.3% as compared to the same period a year earlier. 

Disappointing jobs report, coupled with the unexpected drop in CPI, might fuel speculation of further easing by BoE, which would attract fresh selling pressure around the British Pound and eventually assist the EUR/GBP cross to stage some meaningful recovery from nearly eight-week lows.

Technical levels to watch

From current levels, 0.8580 level is likely to provide immediate support below which the ongoing corrective slide seems to get extended towards 0.8500 psychological mark with 0.8550 level acting as intermediate support. Meanwhile, on a sustained recovery back above 0.8625-30 (session peak) the cross is likely to make a fresh attempt toward reclaiming 0.8700 handle, which if cleared has the potential to lift it towards 50-day SMA resistance near 0.8755-60 region.