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EUR/GBP extends the drop below 0.7800

FXStreet (Edinburgh) - The weakness surrounding the euro is now dragging EUR/GBP to test levels around 0.7780, last seen in July 2012.

EUR/GBP weaker post-EMU data

The cross found increased selling interest after consumer prices in the euro bloc rose at an annual pace of 0.3% during September, a tad lower than August’s 0.4% advance, prompting investors to start pricing in potential additional easing measures by the ECB. Further EMU data showed that the unemployment rate in the region remains entrenched at 11.5%. “The ECB may use Thursday’s post-policy meeting press conference to provide more details on its asset purchase program. EUR weakness suggests markets have given the central bank the benefit of doubt, so the details will be important. Political rumblings on whether the ECB is overstepping its mandate continue. However, we do not expect Draghi to waver and hence expect the EUR to continue to trade weakly. This includes against GBP”, assessed Paul Robson, Senior FX Strategist at RBS.

EUR/GBP key levels

The cross is now losing 0.44% at 0.7775 with the next support at 0.7768 (low Jul.24 2012) followed by 0.7756 July 2012 low). On the upside, a breakout of 0.7829 (high Sep.29) would open the door to 0.7841 (10-d MA) and finally 0.7850 (high Sep.24).

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