EUR/GBP Slammed to 0.7665 After BoE comments

EUR/GBP Slammed to 0.7665 After BoE comments

24 May 2016, 11:53
Roberto Jacobs
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EUR/GBP Slammed to 0.7665 After BoE comments

Extending its slide from session peak of 0.7751, the EUR/GBP pair downfall intensified after BOE MPC Annual Report indicated that UK inflation is likely to rise gradually through 2016.

Earlier on Tuesday, GBP bulls got a boost from the latest 'Brexit' poll results that continued showing lead for the 'Remain' camp. The GBP out-performance further got aggravated once BOE Governor and several MPC members begin their testimony on inflation and the economic outlook before the Parliament's Treasury Committee. Despite the central bank raised concerns over the possibilities of an economic slowdown and a sharp fall in the British Pound on EU referendum, GBP bulls were not reluctant in extending the bullish momentum.

The EUR/GBP pair demand was also dented on deteriorating German business sentiment in May as depicted by the outcome of German ZEW economic sentiment survey, released on Tuesday. The headline ZEW economic sentiment surprised markets to the downside, coming in much weaker at 6.4 points in May as compared to April’s 11.2 points and way below markets’ expectations of an acceleration to 12.1.

The EUR/GBP pair has now dropped back to last week's daily closing lows support near 0.7665-60 area and a follow through drop below last week's low would open room for further near-term depreciating move for the pair.

Technical levels to watch

Below 0.7660-50 immediate support, the pair could possibly find some intermediate support near 0.7620-15 area just ahead of the round figure mark support at 0.7600 level.

Meanwhile on the upside, 0.7710-0.7700 handle now become immediate resistance to watch for. Even if the pair manages to clear this immediate resistance, any further up-move might continue to confront strong resistance near 0.7750 level and only a decisive break through this resistance might negate the near-term bearish bias.


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