EUR/GBP bounces off 1-1/2 week lows ahead of BOE inflation hearings
• Extends last week’s sharp corrective slide.
• On offers for the fifth consecutive session.
• BoE’s inflation report hearings in focus.
The EUR/GBP remained under some selling pressure for the fifth consecutive session on Tuesday and dropped to 1-1/2 week lows, around mid-0.8800s on Tuesday.
The cross extended last week's sharp corrective slide and has now retreated over 150-pips from levels beyond the key 0.90 psychological mark, or four-week tops touched last Wednesday.
The latest German political turmoil finally dragged the cross below the 0.8900 handle and was now seen prompting some fresh technical selling through the early European session.
It would now be interesting to see if the cross is able to find any buying interest at lower levels or continues with its bearish trajectory as focus shifts to today's BoE inflation hearings. The BoE Governor and several MPC members will testify on inflation and the economic outlook before Parliament's Treasury Committee in London at 10:00 GMT.
Meanwhile, news surrounding the UK government's discussion to increase its offer for the so-called EU divorce bill might also influence sentiment surrounding the British Pound and provide some impetus.
Technical levels to watch
A follow-through weakness below 0.8850-45 zone would turn the cross vulnerable to head towards the 0.8800 handle before eventually dropping to the very important 200-day SMA support near the 0.8780 region.
On the upside, any recovery attempts might now confront fresh supply near the 0.8870-75 region, above which the cross is likely to surpass the 0.8900 handle and test 0.8915-20 supply zone.