EUR/GBP plummets to one-month lows, but finds some support near 0.90 mark

The EUR/GBP cross broke down of its Asian/early European session consolidation phase and tumbled to one month lows, closer to the key 0.90 psychological mark.

The cross came under intense selling pressure and eroded around 50-pips following the release of latest UK inflation report that showed headline CPI matched a 4-year high reading of 2.9%, earlier recorded in May. 

Against the backdrop of expectations for a hawkish BoE tilt, today's release lifted the British Pound sharply higher across the board and dragged the cross to its lowest level August 10.

Meanwhile, traders rushed to unwind their long bets once the cross broke below mid-0.9000s, which might have further aggravated the slide and collaborated to the pair's heavily offered tone for the third consecutive session.

The selling pressure, however, seems to have abated near the 0.90 handle and the cross managed to rebound around 20-25 pips as investors now look forward to Wednesday's UK labor market data ahead of the very important BoE announcement on Thursday. 

Technical levels to watch

On a sustained weakness below the 0.90 handle, the cross is likely to accelerate the fall towards 0.8970 horizontal level before eventually dropping to 0.8935-30 support zone.

Meanwhile, on the upside, any recovery attempts beyond 0.9030 level might now confront some fresh supply near the 0.9060-65 region, above which the cross is likely to make an attempt to reclaim the 0.9100 handle.