EUR/GBP slides further, aiming 0.8500 handle

After Tuesday's rejection from 0.8700 handle, the EUR/GBP cross resumed with its near-term corrective slide and dropped to hit a fresh two-month low.

Currently trading at a fresh session low, around 0.8530-35 region, the cross remained under pressure for the third consecutive session and is now headed to post third straight weekly loss, marking fifth weekly decline in the previous six. An offered tone around the EUR/USD major for the tenth straight session, taking the major to fresh yearly lows, has been the key factor contributing to the EUR/GBP pair's ongoing slide from post US presidential election swing highs beyond 0.9000 psychological mark. 

Meanwhile, today's comments from ECB President Mario Draghi that the central bank will continue to act as warranted by using all instruments available within mandate failed to provide any respite for the shared currency. This followed by comments from MPC member Ben Broadbent that BOE is less inclined to accommodate above target inflation boosted the British Pound across the board and attracted fresh selling pressure around the EUR/GBP cross, dragging it closer to 0.8500 psychological mark. 

Focus now shifts to various Fed speakers, which could have a diverging effect on the shared currency and the British Pound, and eventually provide some impetus for the EUR/GBP cross. 

Technical levels to watch

A follow through selling pressure is likely to drag the cross towards 0.8500 mark, which if broken decisively should open room for continuation of the near-term corrective slide initially towards 0.8465 intermediate support and eventually towards next major support near 0.8420 region. On the upside, recovery momentum above session peak resistance near 0.8550-55 region is likely to trigger a short-covering bout towards 0.8600 handle.

To learn more about this topic, check our video analysis