EUR/GBP drops closer to weekly lows ahead of important macro data

The EUR/GBP cross traded with a mild bearish bias for the third consecutive session and is currently trading near the lower end of weekly trading range ahead of important macro data.

The cross extended its sharp reversal from fresh yearly tops touched on Wednesday after the latest hawkish remarks by the BOE Governor Mark Carney, saying that some removal of monetary stimulus would become necessary if tolerance for above-target inflation falls. 

   •  GBP: BoE rate rise would be negative? – HSBC

The fall, however, has been limited as the shared currency remained underpinned by the ECB President Mario Draghi's less dovish statement, hinting towards a possible monetary policy tweak in the near-future. 

Investors now look forward to today's important releases of the flash Euro-zone CPI followed by UK releases - final GDP print and current account data for the first quarter of 2017, before initiating any fresh near-term directional bets.

   •  Euro area inflation likely down to 1.30% y/y in June – Danske Bank

From a technical perspective, the cross has been oscillating within a broader trading range over the past three weeks or so and hence, it would be prudent to wait for a decisive break through the range before determining the next leg of directional move.

Technical levels to watch

A follow-through selling pressure below 0.8770 region is likely to accelerate the slide towards 0.8725 support before the cross eventually breaks below the 0.8700 handle and head towards testing its next major support near 0.8655-50 region.

On the flip side, 0.8800 level now becomes immediate strong resistance, which if conquered could lift the cross back towards 0.8850 intermediate resistance area en-route yearly tops 0.8880 level (yearly tops).