EUR/GBP plummets to lows, inching back closer to 0.8700 mark

• Hawkish BoE vote splits triggers a sharp GBP short-covering.
• Fresh Italian political jitters weigh on EUR and add to the selling pressure.

The EUR/GBP cross extended its rejection slide from the 0.8800 handle and tumbled to fresh session lows on the back of hawkish BoE vote split.

At its June meeting, held this Thursday, the Bank of England decided to keep the interest rate and the asset purchasing program unchanged at 0.50% and £435 billion respectively. However, a hawkish split in the MPC votes took traders off guard and triggered a sharp GBP short-covering rally.

Meanwhile, the appointment of Alberto Bagnai, a major Euro-skeptic, as Italy's senate finance committee head bolstered the new government's possible future agenda of leaving the European Union and weighed heavily on the shared currency.

A combination of factors dragged the cross lower for the second consecutive session on Thursday, with the latest leg of a sharp slide of nearly 70-pips reversing the majority of its weekly and the post-ECB recovery gains.

It would now be interesting to see if today's downfall marks resumption of the prior depreciating move or the cross once again manages to find some fresh buying interest at lower level amid persistent Brexit/UK political uncertainties.

Technical levels to watch

Immediate support is pegged near the 0.8720 level and is followed by a strong horizontal support near the 0.8700 handle, which if broken would confirm a fresh bearish breakdown and turn the cross vulnerable to extend the downfall in the near-term.

On the flip side, any up-move might now confront immediate resistance near the 0.8760 level, above which the cross is likely to make a fresh attempt towards conquering the 0.8800 handle before eventually darting towards the 0.8840-45 supply zone.

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