The EUR/GBP cross reversed all of its early gains to 0.8725 region and refreshed session low near 0.8660 level following the release of UK inflation figures.
Spot ran through fresh offers after the latest UK headline inflation, as measured by CPI, rose more-than-expected, by 2.3% y/y and 0.7% m/m. The latest yearly reading represents the highest level of inflation since September 2013 and moved well above the BoE's target rate of 2.0%.
The data reaffirmed the sole dissenter at the BoE’s most recent monetary policy decision, Kristin Forbes' belief that inflation is picking up sharply and sparked a fresh wave of buying interest around the British Pound.
Meanwhile, market also seems to have digested Macron’s win in the first French Presidential debate, which provided an additional boost to the shared currency and helped the cross to build on previous session recovery gains from multi-day lows. Easing political uncertainty, however, seems to have collaborated towards limiting any further downslide, at least for the time being.
Next in focus would be BoE Governor Mark Carney's speech, due in a short while from now. Any further hawkish hints is likely to spark a fresh leg of bullish momentum for the British Pound and attract some fresh selling pressure around the EUR/GBP cross.
Technical levels to watch
From current levels, the slide is likely to get extended towards mid-0.8600s before the cross eventually heads towards testing the 0.8600 handle.
Meanwhile, on the upside, any recovery above 0.8700 handle now seems to confront resistance near 0.8730-35 area, above which the cross is likely to aim back towards 0.8780 important hurdle ahead of the 0.8800 round figure mark.