EUR/GBP flirting with 3-week lows near 50-DMA support area

The British Pound outperformed its European counterpart, with the EUR/GBP cross dropping to three week low and flirting with 50-day SMA immediate support.

Currently trading around 0.8535 region, the cross maintained its offered tone for the third consecutive session and failed to gain any respite from disappointing German IFO Business Climate index for January. 

Meanwhile, comments from UK Prime Minister Theresa May, saying that she would publish her plan for Britain's exit from the European Union in a formal 'White Paper' document to allow parliament to scrutinize it, triggered a fresh bout of short-covering around the GBP/USD major and further collaborated to the pair's offered tone to the lowest level since Jan. 5. 

As the Brexit saga continues, investors now turn their attention to the release of a key macroeconomic indicator from UK, quarterly growth numbers, due on Thursday and would help determine the pair's next leg of directional move.

Technical levels to watch

On a convincing break below 50-day SMA support at 0.8530 region seems to accelerate the slide towards 0.8500 psychological mark below which the cross is likely to head towards testing monthly lows support near 0.8450 level. 

Meanwhile on the upside, recovery momentum above 0.8570-75 region could get extended towards 0.8600 handle. However, any further up-move beyond 0.8600 mark might now be capped at 0.8625-30 horizontal resistance.