EUR/GBP hangs closer to 2-week lows, UK/EZ CPI and Carney in focus

The EUR/GBP cross came under some renewed selling pressure on Tuesday and has now eroded all of the previous session's modest recovery gains.

The shared currency held defensive in wake of the latest political developments in the Euro-zone and has been one of the key factors weighing on the cross through early European session. 

Meanwhile, the market seems to have digested Monday's report, via Bloomberg, noting that the Brexit negotiations could be headed for a catastrophic breakdown if the EU refuses to compromise. Hence, a modest uptick in the GBP/USD major further collaborated to the pair's offered tone on Tuesday.

Currently trading around 0.8875-70 band, back closer to near two-week lows, investors now look forward to the latest UK inflation figures, due in a short while from now, for some fresh impetus. 

   •  UK: Expect headline inflation to be 2.9% for September - TDS

Today's CPI print, along with BOE Governor Mark Carney's testimony before the Treasury Select Committee, would influence investors' expectations over a possible BoE rate hike move in November and act as an important catalyst that would drive the British Pound in the near-term.

Also in focus would be the German ZEW economic sentiment survey and the final Euro-zone CPI print, which would also be looked upon to grab some short-term trading opportunities. 

   •  UK and Eurozone inflation figures amongst market movers today – Danske Bank

Technical levels to watch

Immediate support remains near mid-0.8800s, below which the cross is likely to accelerate the fall towards 0.8815 intermediate support ahead of the 0.8800 handle and 0.8775 horizontal support.

On the upside, the 0.8900 handle now seems to have emerged as immediate strong resistance, above which a bout of short-covering could lift the cross back towards 0.8930 horizontal barrier.