EUR/GBP dips below 0.8600 handle after EU-PMI

The British Pound maintained its outperformance against its European counterpart, with the EUR/GBP cross extending its near-term corrective move and is now trading below 0.8600 handle.

Tuesday’s releases of the flash version of Euro-zone PMI prints failed to impress bulls and attract fresh buying interest around the shared currency. However, a broadly weaker greenback is seen supporting the EUR/USD major and restricting immediate sharp slide for the EUR/GBP cross.

Meanwhile, the incoming UK economic data has failed to provide evidence of post-Brexit economic fallout and has acted as a supportive pillar for the ongoing recovery in the British Pound. A broad based recovery in the sterling stalled the EUR/GBP pair’s up-move and triggered a near-term corrective move, with the pair now correcting over 100-pips from a multi-month high level of 0.8720 touched in the previous week. 

Technical levels to watch

On a sustained weakness below 0.8600 round figure mark, the cross is likely to extend its downslide immediately towards 20-day SMA support near 0.8550 region before heading towards retesting sub-0.8500 mark (0.8480-75 zone) strong horizontal support. 

Meanwhile on the upside, any fresh up-move now seems to confront strong resistance near 0.8650 region, which if cleared seems to assist the pair beyond 0.8675 level towards reclaiming 0.8700 handle and aim back towards recent swing high resistance near 0.8725 region.