EUR/GBP drops to session low after Carney’s initial comments

The EUR/GBP cross reversed early gains to 0.8700 handle and has now drifted into negative territory as BOE Governor Mark Carney testimony before the Parliament's Treasury Select Committee got underway.

Currently trading around 0.8660, Carney's initial comments that Brexit is not the biggest financial stability risk for the UK, extended some support to the British Pound and collaborated to the pair's reversal move from 0.8700 handle. It is, however, worth reporting that Carney is unlikely to comment on the central bank's monetary policy stance and hence, focus would remain on how the central bank might deal with Brexit.

Moreover, market also seems to have digested disappointing UK goods trade balance data, which negated strong manufacturing and industrial production growth and helped the cross reverse Tuesday’s reversal move from two-month peak.

Meanwhile, a fresh bout of selling pressure around the shared currency, with the EUR/USD major breaking below 1.0500 psychological mark, is also contributing to the slide witnessed in the last hour. 

Technical levels to watch

A follow through retracement below 0.8650 immediate support is likely to drag the cross towards 100-day SMA support near 0.8630 region below which the slide could further get extended towards sub-0.8600 support near 0.8580-75 region.

Meanwhile on the upside, 0.8700 handle now becomes immediate hurdle, which if conquered would trigger a fresh leg of up-move, initially towards 0.8730 level and eventually to yesterday's two-month high resistance near 0.8765 region.