EUR/GBP weighed down by anxiety ahead of French election

The EUR/GBP cross ran through some fresh offers during European session and reversed early tepid recovery gains session high near 0.8385 region.

Currently placed few pips away from session low, around 0.8360 region, the cross failed to benefit from more or less better-than-expected Euro-zone PMI prints, with long-Euro unwinding trade turning out to be a key theme heading into the big event risk - first round of the crucial French Presidential election.

Meanwhile, market seems to have largely ignored a sharp slowdown in the UK monthly retail sales, reversing previous month's gains and coming-in to show -1.8% decline m-o-m. Against the backdrop of risking inflationary pressure in the UK economy, weaker sales at retail level is seen as resulting into more hawkish BoE stance. Hence, disappointing retail sales data did little to dampen the prevalent bullish sentiment surrounding the British Pound, led by the UK PM Theresa May's surprise announcement for an early election in June. 

With the economic data out of the way, Sunday's French polls would remain a key determinant of the pair's next leg of directional move. Nevertheless, the cross is all set for second consecutive week of losses and could possibly be headed for its lowest weekly close since late June 2016.

Technical levels to watch

On a sustained weakness below 0.8350 level, the cross is likely to accelerate the slide towards retesting multi-month lows support near 0.8315-10 area before eventually confirming a fresh bearish break-down and aim towards testing its next major support near mid-0.8200s in the near-term.

On the flip side, any recovery beyond the 0.8400 handle is likely to confront strong resistance near mid-0.8400s, above which a bout of short-covering could lift the cross beyond the key 0.85 psychological mark towards its next hurdle near 0.8525-30 region.