EUR/GBP dips below 0.85 as corrective move in Cable gathers pace

A convincing break in the GBP/USD pair above 1.30 handle in Asian, pushed the EUR/GBP cross to a session low of 0.8463.

Drops to hourly 200-MA

The cross fell to near hourly 200-MA level of 0.8462 before recovering slightly to trade around 0.8480 levels. Corrective rally in the Cable gathered pace mainly on account of the sharp gains in the GBP/JPY cross.

Meanwhile, the EUR/USD pair strengthened as well, but failed to sustain above 1.1078 (23.6% of 1.1616-1.0911) levels. Consequently, the EUR/GBP cross weakened.

The data docket is thin with just German final CPI print due for release. Investors should remain cautious with respect to GBP strength as the Bank of England (BOE) is widely expected to cut the interest rate this week.

EUR/GBP Technical Levels

A break above 0.85 handle could yield a re-test of 0.8547 (July 5 high). A break higher would expose 0.8627 (July 6 high). On the other hand, a breakdown of support at 0.8462 (hourly 200-MA) would open doors for a slide to 0.84 handle. Further slide could run into support at 0.8241 (June 30 low).