The EUR/GBP cross faded a knee-jerk bullish reaction, reversing all of its recovery gains to the key 0.85 psychological mark, and tumbled to fresh multi-week lows following the UK PM Theresa May's announcement.
Spot ran through fresh offers after May confirmed that the UK snap election would be held 8th June. The announcement was in-line with rumors spreading on the wires but did little to assist the cross to build on to its recovery move. Market seems to have taken the announcement as a positive development, with the British Pound gaining traction across the board.
The government would now move for legislation to hold early election, as early as tomorrow, which would keep investors on edge and continue fueling volatility across GBP crosses.
• UK PM Theresa May: Early election is the ‘only way to guarantee stability’ for years ahead
Meanwhile, steady gains for the EUR/USD major, amid nervousness ahead of the crucial French Presidential election, has been lending some support while sentiment surrounding the British Pound remains an exclusive driver of the pair's volatile price-action on Tuesday.
Technical levels to watch
Immediate support is pegged near 0.8430-25 area, below which the downslide could get extended towards the 0.8400 handle ahead of 0.8385 horizontal support. On the upside, any recovery move now seems to confront immediate resistance near 0.8465 level and further recovery beyond this immediate hurdle might now be capped at the key 0.85 psychological mark.
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