EUR/GBP slides to fresh one-month lows, around 0.8575 region

EUR/GBP witnessed some selling on Wednesday and dropped to over one-month lows.
Upbeat UK macro releases reaffirmed the optimist outlook and underpinned the sterling.
A modest USD rebound weighed on the euro and further contributed to the selling bias.

Haresh Menghani FXStreet

The EUR/GBP cross edged lower through the first half of the European session and dropped to fresh one-month-lows, around the 0.8575 region in the last hour.

Having faced rejection near the 0.8600 mark, the cross met with some fresh supply on Wednesday and is now looking to add to this week's heavy losses led by the outcome of the Scottish election. Nicola Sturgeon’s Scottish National Party (SNP) fell short of securing an outright majority by the narrowest possible margin and pushed back the risk of an imminent independence referendum.

This, along with the optimism over the UK economic recovery from the pandemic acted as a tailwind for the British pound. The upbeat outlook was reinforced by Wednesday's UK macro releases, which showed that the economy expanded by 2.1% MoM in March. This was accompanied by an upward revision of the previous month's reading and stronger Manufacturing/Industrial Production figures.

On the other hand, the shared currency was weighed down by a modest US dollar rebound from multi-week lows. This was seen as another factor that exerted some downward pressure on the EUR/GBP cross. The euro bulls largely shrugged off and seemed unimpressed by the fact that the European Commission raises its Eurozone GDP growth forecasts for 2021 and 2022 to 4.3% and 4.4%, respectively.

Meanwhile, the latest leg down over the past hour or so followed the release of the Eurozone March industrial production data, which indicated that the recovery in the manufacturing sector is still in the doldrums. In fact, the industrial output in the region rose by a modest 0.1% MoM in March as against consensus estimates pointing to a robust 0.7% growth.

The EUR/GBP cross has now erased over 50% of its strong recovery gains posted in April. This, along with sustained weakness below the 0.8600 mark, might have shifted the near-term bias back in favour of bearish traders. Hence, a subsequent slide back towards the 0.8545 intermediate support, en-route the key 0.8500 mark, looks a distinct possibility.

Technical levels to watch

EUR/GBP

Overview
Today last price	0.8576
Today Daily Change	-0.0012
Today Daily Change %	-0.14
Today daily open	0.8588

Trends
Daily SMA20	0.8666
Daily SMA50	0.8619
Daily SMA100	0.8732
Daily SMA200	0.8885

Levels
Previous Daily High	0.8614
Previous Daily Low	0.8582
Previous Weekly High	0.8711
Previous Weekly Low	0.8624
Previous Monthly High	0.872
Previous Monthly Low	0.8472
Daily Fibonacci 38.2%	0.8594
Daily Fibonacci 61.8%	0.8602
Daily Pivot Point S1	0.8576
Daily Pivot Point S2	0.8563
Daily Pivot Point S3	0.8544
Daily Pivot Point R1	0.8607
Daily Pivot Point R2	0.8626
Daily Pivot Point R3	0.8639

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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