EUR/GBP tracks lower towards key support level just under 0.8700
The pair has somewhat been trading within a "band" since October last year between levels just under 0.8700 and 0.9000. The exception to that was the April breakout which saw the pair tread water close to 0.8600 levels.
Other than that, the key support level in the form of the 61.8 retracement @ 0.8693 has been a solid area for buyers to lean on. And that's where we are heading towards now.
The pair is now threatening to break below the 16 June low @ 0.8720, which is acting as a minor support level for the time being. The key for sellers will be to see if the recent momentum can find another run to close below the 61.8 retracement level once again on the daily chart.
The reversal seen in April was due to a slew of terrible economic data from the UK compounded with the BOE ruling out May as the time to hike rates. The move this time around could be more sustainable but of course there is the odd risk of Brexit headlines muddying the picture.
Trading the pair seems like trading a race to the bottom it feels like between the two currencies. Both has struggled recently, and the trade now is to go with which is going to perform a little less worse than the other.
With positive news from the Brexit front earlier today, that puts the quid at a slight edge for the time being. But once again, the key level mentioned above needs to be broken in order for a downside extension to continue.
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