EUR/GBP stages recovery from 2-month lows, defends 0.8500 region

Having tested sub-0.8500 mark, the EUR/GBP cross staged a goodish recovery of nearly 60-pips from session peak amid renewed GBP selling pressure. 

Currently trading around mid-0.8500s, EU's Verhofstadt reiterated previous comments from Brexit minister David Davis that UK need to complete the process of exiting European Union before next EU parliament elections, thus leaving a window of only 14-15 months from now, and helped the cross to rebound from two-month lows. Meanwhile, the British Pound failed to benefit from better-than-expected UK public sector net borrowings data.

In absence of any top-tier economic releases, focus would remain on Brexit-related news and hence, BOE MPC member Forbes’ speech would be looked upon for fresh impetus. Meanwhile, key focus would be on UK Autumn Statement on Wednesday, where UK Chancellor Philip Hammond will outline plans for fiscal spending alongside latest forecasts for growth and public finances.

Technical levels to watch

Momentum above 0.8555-60 area (session peak) could get extended immediately towards 0.8575-85 resistance before the cross breaks through 0.8600 handle and retest 0.8620-30 important horizontal resistance. On the downside, 0.8500 psychological mark now becomes immediate support to defend. Failure to hold this immediate support might continue dragging the cross further towards 0.8425-20 support area with 0.8465-60 region acting as intermediate support.

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