- EUR/GBP witnessed some follow-through selling for the third straight session on Tuesday.
- The optimism over the easing of COVID-19 restrictions in the UK underpinned the sterling.
- Disappointing Eurozone ZEW survey results weighed on the euro and added to the selling bias.
The shared currency weakened across the board in reaction to the disappointing ZEW survey and dragged the EUR/GBP cross to one-and-half-week lows, around the 0.8550-45 region in the last hour.
The cross extended last week's retracement slide from levels beyond the 0.8600 mark and witnessed some follow-through selling for the third consecutive session on Tuesday. The downward momentum push the EUR/GBP cross through the 0.8565-60 horizontal support and was sponsored by a combination of factors.
The British pound was supported by UK Prime Minister Boris Johnson's announcement on Monday that all restrictive measures would be lifted on July 19. Apart from this, sustained US dollar selling bias provided an additional boost to the sterling, which, in turn, exerted pressure on the EUR/GBP cross.
On the other hand, the common currency lost some ground following the disappointing release of the German ZEW Economic Sentiment Index, which plunged to 63.3 in July from 79.8 previous. Adding to this, the gauge for the Eurozone fell to 61.2 for the current month, missing 84.4 consensus estimates.
The incoming data suggests that the nascent Eurozone economic recovery might be losing steam amid concerns about the spread of the highly contagious Delta variant of the coronavirus. This, in turn, supports prospects for an extension of the ongoing depreciating move for the EUR/GBP cross.
Technical levels to watch
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