EUR/GBP trims gains, now back below 0.7950

After rising to nearly two-month high and moving within striking distance of tapping 0.8000 psychological mark, the EUR/GBP cross trimmed its gains and has now dropped back below the mid-point of 0.7900-0.8000 handle.

The shared currency continues to be benefited from the prevalent weakness in the British Pound led by rising 'Brexit' uncertainty. With just 10 days before the UK-EU referendum, the British Pound is likely to continue underperforming its major peers.

Earlier on Monday, the pair extended Friday's late up-surge led by the latest poll results that provided lead to the ‘Leave’ camp. Moreover, investors also remain indecisive about the tone (hawkish/dovish) used by the Fed while communicating its monetary policy decision, which could have varying effect on the shared currency and sterling and eventually spurt volatility in the EUR/GBP cross.

In the meantime, traders will take cues from Tuesday's UK CPI print and industrial production data from the Euro-zone.

Technical levels to watch

Failure to test 0.8000 psychological mark resistance and a subsequent drop below 0.7950 now seems to extend the pair's corrective move towards 0.7900 round figure mark, below which the pair could easily drop to test 0.7880 support area. Failure to hold 0.7880 support might now negate any further bullish bias for the pair and drag it back towards 0.7850 horizontal support.

On the flip side, on a sustained momentum back above 0.7950 the pair seems more likely to make a fresh attempt towards testing 0.8000 psychological mark resistance, which if conquered might now trigger a fresh leg of up-move, boosting the pair immediately towards 0.8080-85 resistance area.