EUR/GBP breaks under 0.8500 to the lowest level in 8 weeks

• Pound extends weekly gains versus the euro on Thursday.
• EUR/GBP next resistance at 0.8470, then focus turns to YTD lows around 0.8450.

The EUR/GBP is falling for the sixth consecutive day. On Thursday, it broke under 0.8500 and bottomed at 0.8480, the lowest level since mid-August.  The euro remains under pressure versus the pound.

The euro is recovering on Thursday versus the Swiss franc but it is unable to stop the decline versus the pound. After last week's concerns regarding the fuel crisis, the improvement around the UK's economic outlook is helping the pound.

Also, the latest economic reports from the Eurozone were not positive, with negative numbers for Industrial Production in Germany. Reports suggested the European Central Bank is studying a new QE program in order to limit the potential impact of the end of the PEPP next year. The minutes of the last ECB meeting showed no surprises.

Technical factors are contributing to the decline in EUR/GBP. On Wednesday, it was unable to recover 0.8550 and now is under 0.8500. A consolidation at current levels would keep the bearish tone intact, despite oversold reading in short-term technical indicators.

The key critical support is seen at the August low at 0.8446. A weekly close above 0.8600 would be a positive development of the euro, suggesting a bottom is in place and could open the doors to more gains.

Technical levels