EUR/GBP Seems Vulnerable to Slide Below 0.7800
Extending its break-down momentum on Wednesday, the EUR/GBP pair is dipped lower to 0.7813 ahead of the UK jobs report and the final print of EU CPI.
On Tuesday, the pair attempted a sharp recovery from 0.7800 handle and move back above 0.7855-56 level (recent trading range break-down level), before resuming its downward trajectory to settle at 0.7820 for the day.
The pair now awaits the release of UK labor market report and the final CPI print from the Euro-zone. The number of people claiming unemployment-related benefits during the month of April is expected to have increased by 4.3K, while the unemployment rate is expected to hold steady at 5.1%. What would of key important for the market is the Average Earnings Index, which it prints higher-than-expected (1.7%) reading might trigger a larger up-move for the British Pound.
From the Euro-zone, the final CPI print is expected to confirm a 0.2% contraction in prices, matching the flash estimates. Looming deflationary worries in the Euro-zone might continue to drag the shared currency lower against its major counterparts, resulting into further down-slide for the EUR/GBP pair.
Technical levels to watch
On a sustained break below 0.7800 would drag the pair immediately towards 0.7780 horizontal support and the fall could further get extended towards April daily closing lows support near 0.7750 level.
On the upside, any attempts of recovery might now confront strong resistance near 0.7855-60 region. Even if the pair manages to build some momentum beyond this immediate resistance, any further strength would now be capped at the very important 0.7900 handle.