EUR/GBP Taps 0.7750 as Pound Slide Continues

EUR/GBP Taps 0.7750 as Pound Slide Continues

1 June 2016, 15:22
Roberto Jacobs

EUR/GBP Taps 0.7750 as Pound Slide Continues

The EUR/GBP pair held its strong bid tone and extended its bullish momentum to currently trade at day's peak level of 0.7750 as the British Pound remained under pressure on uncertainty surrounding 'Brexit'.

Ahead of the EU referendum vote on 23 June, the British Pound was amongst the weakest currencies despite of today's slightly better-than-expected UK manufacturing PMI release. The British Pound came under severe selling pressure on Tuesday after a new online and telephone surveys showed a lead for the 'leave' camp.

Moreover, the shared currency seems to benefit from Tuesday's softer-than-expected US consumer confidence and Chicago PMI data that forced investors to reevaluate the possibilities of Fed rate-hike in June.

Investors now turn their focus to today's release of the US ISM manufacturing PMI, which might have diverging effect on both, the EUR/USD and the GBP/USD pairs, and eventually lead to momentum play for the EUR/GBP pair traders.

Technical levels to watch

Now that the pair has already risen to its immediate resistance near 0.7750, a strong follow through buying interest beyond 0.7750 now seems to assist the pair to further extend its recovery trend towards 100-day SMA resistance near 0.7795-0.7800 handle.

Conversely, signs of profit-taking from current resistance might now find immediate support near 0.7725, which is closely followed by support near 0.7700 handle. Additional weakness below 0.7700 handle now is likely to get bought into and hence is likely to be limited till 0.7665-60 horizontal support zone.


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