EUR/GBP slammed to 0.8450 ahead of Carney’s testimony

The British Pound continues to gain traction against its European counterpart, with the EUR/GBP cross extending its corrective move for fourth consecutive session to currently trade near 0.8450 level. 

Easing political uncertainty in the UK has been boosting the British Pound higher. Meanwhile, the shared currency got a boost from higher-than-expected German WPI print but continued with its recent underperformance versus the British Pound. 

Developments surrounding the British Pound might continue to drive the EUR/GBP cross as we head towards BOE Governor Mark Carney's testimony about BoE's Financial Stability Report before the Treasury Select Committee. Major focus remains on this week's BOE monetary policy decision, where majority of the market participants expect a rate-cut announcement and (or) additional stimulus measures by the central bank.

From technical perspective, the pair was facing difficulty in sustaining its strength above 0.8600 handle, thus forcing traders to take some profits off the table and eventually triggering near-term corrective move.

Technical levels to watch

Weakness below 0.8450 immediate support seems to continue exerting further downward pressure, dragging the cross towards 0.8400 handle. A follow through selling pressure below 0.8400 handle is likely to extend the near-term corrective move, initially towards 0.8340-35 intermediate support and eventually towards its next major support near 0.8300-0.8280 region.

On the flip side, recovery momentum back above 0.8500 handle now seems to confront strong resistance near 0.8560-65 region, above which the pair is likely to make a fresh attempt to move back above 0.8600 strong resistance. A convincing strength above 0.8600 resistance now seems to pave way for continuation of the pair's Brexit-led near-term appreciating move.