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EUR/GBP tumbles to lows, back below 0.8800 handle

   •  UK construction PMI for Nov. betters expectations.
   •  Brexit optimism continues to boost the GBP.

The EUR/GBP cross reversed an early dip to sub-0.8800 level and refreshed session tops during the early European session, albeit lacked any follow through momentum.

The pair's modest recovery move from levels below the very important 200-day SMA stalled near the 0.8835 region following the release of yet another better-than-expected UK construction PMI for the month of November. 

Against the backdrop of the latest Brexit optimism, today's upbeat reading has been one of the key factors behind the British Pound's relative outperformance against its European counterpart.

Meanwhile, the latest leg of sharp slide over the past hour was triggered by news headline, quoting the EU's Chief Brexit negotiation Michel Bernard Barnier that a breakthrough is likely today.

Despite a good two-way move, the cross lacked conviction as traders seemed to refrain from placing aggressive bets and preferred to wait for any fresh updates from the UK PM Theresa May and the EU President Jean-Claude Juncker's key meeting to work on a Brexit deal.

Technical levels to watch

A follow-through selling pressure back below the 0.8800 handle, leading to a subsequent break below 0.8785-75 support, would confirm near-term bearish bias and accelerate the fall towards 0.8735 intermediate support en-route the 0.8700 handle.

On the flip side, the 0.8830-35 region now seems to have emerged as immediate resistance, above which a bout of short-covering could lift the cross back towards 0.8865 hurdle ahead of the 0.8900 handle.

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