EUR/GBP under pressure near 0.8500, ECB eyed

EUR/GBP has faded the initial spike to the vicinity of the 0.8540 area and is now deflating to the 0.8500 neighbourhood.

EUR/GBP looks to the ECB

The European cross is retreating for the first time this week, eroding part of the strong rebound from 5-month lows around the 0.8300 handle seen on Monday to yesterday’s highs in the mid-0.8500s.

The persistent resilience around the British Pound has prompted the cross to deflate from earlier tops, although the bid tone surrounding the shared currency is expected to limit the downside.

Ahead in the session, the ECB will hold its monetary policy meeting, with consensus seeing the central bank extending its bond-buying programme further beyond March 2017 albeit keeping unchanged the monthly purchases, currently at €80 billion.

In addition, market participants will closely follow the statement and press conference by President Draghi looking for clues on a probable QE tapering in the longer run.

EUR/GBP key levels

The cross is now retreating 0.16% at 0.8504 facing the next support at 0.8298 (low Dec.5) followed by 0.8295 (200-day sma) and then 0.8248 (low Jul.14). On the other side, a surpass of 0.8553 (high Dec.7) followed by 0.8582 (high Nov.30) and finally 0.8637 (100-day sma).