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.
