EUR/GBP trims initial gains but remains well supported above 50-DMA

The EUR/GBP pair extended its last week's sharp recovery and jumped to a four-week high level of 0.7900 before trimming its gains to currently trade at 0.7880 level. 

A broad based sell-off in the British Pound was triggered on Monday after the latest 'Brexit' polls suggests rising possibilities of the UK voting to leave the EU on June 23 EU referendum. The pair opened above 50-day SMA and extended its rise to 0.7900 before facing some fresh supply around 0.7900 handle. 

With only the scheduled release of German factory orders data for the month of April, in otherwise a quiet economic docket, the EUR/GBP cross would continue to be driven by sentiment surrounding the EU referendum.

Technical levels to watch

On the immediate downside, 50-day SMA near 0.7850-45 region now turns immediate support, below which the pair could drop back to 0.7825 support region. On the flip side, momentum above 0.7900 handle resistance is likely to get extended further towards 0.7925-30 resistance zone. A decisive strength above 0.7925-30 resistance might now negate any near-term bearish outlook for the pair, thus pave way for continuation of the upward trajectory towards testing its next major resistance near 0.8000 psychological mark.