EUR/GBP surges to 1-1/2 week tops on disappointing UK data
The EUR/GBP cross built on previous session's up-move and jumped to 1-1/2 week tops near 0.8835 region post dismal UK data.
The cross caught some fresh bids and now seems to have decisively broken through a six-day-old trading range after data released from the UK showed an unexpected contraction in manufacturing and industrial output during the month of May. In fact, the UK manufacturing production fell 0.2% m-o-m during May, lower than 0.2% rise recorded in April and worse than 0.5% growth expected.
• UK industrial production drops unexpectedly in May
Meanwhile, total industrial output also showed a 0.1% drop in the reported month, down from a 0.2% rise seen in April. Moreover, UK May visible trade deficit rose more-than-expected to £-11.863 billion from previous month's £10.595 billion and added to this week's series of UK data-disappointment, which was eventually seen weighing heavily on the British Pound.
With the EUR/USD major consolidating perceived hawkish ECB minutes-led overnight strong gains, weaker sentiment surrounding the British Pound is turning out to be an exclusive driver of the pair's strong up-move to the highest level since June 28.
• ECB: Monetary and financial conditions still very loose - Nomura
Technical levels to watch
From current levels, immediate resistance is seen near mid-0.8800s, above which the cross is likely to head back towards 0.8880 level (yearly tops) before aiming to reclaim the 0.8900 handle.
On the downside, the 0.8800 handle now becomes an immediate support to defend, which if broken could drag the cross back towards 0.8780-75 horizontal support en-route strong horizontal support near 0.8755-50 region.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
