EUR/GBP remains on the defensive, capped below 0.8550

• The euro fails to regain 0.8550 and depreciates for the third consecutive day.
• The pound has shrugged off post_Brexit concerns to rebound against EUR, USD.
• EUR/GBP approaching relevant support levels at 0.8525 and 0.8500.

The euro’s attempt to rebound from intra-day lows at 0.8530 has been capped at the previous support area around 0.8550. The pair keeps heading lower for the third consecutive day against a firmer sterling.

The sterling extends last week’s recovery

The cable is showing strength on Monday, extending its rebound from recent lows against the euro and the USD in a risk-off market session. The EUR/GBP has depreciated beyond 1% so far in a three-day losing streak, to approach two-week lows at 0.8525.

In absence of key macroeconomic events, and with the Chinese and South Korean markets closed on bank holidays, the British pound seems to have taken better advantage of a softer USD to pare previous losses. The cable has shrugged off previous weakness triggered by concerns of the post-Brexit consequences and their impact on the UK’s growth perspectives.

On the other end, a certain deterioration of the Eurozone’s growth perspectives amid the surging energy prices, confirmed by a recent batch of key fundamentals, and the monetary policy differential between the ECB and the Federal reserve are weighing the common currency across the board.

EUR/GBP: Next support lies at 0.8525

From a technical perspective, the EUR/GBP is approaching some relevant support levels at 0.8525 (September 20 and 28  lows) and 0.8500 (September 16 low). Below here, the pair would be facing a year-to-date low at 0.8450 (August 10 low)

On the downside, a relevant recovery attempt should regain the 100-day SMA, at 0.8565, to advance above 0.8600 and launch another attack to a key resistance area at 0.8660/70 (May 25, July 20, and September 29 highs)

Technical levels to watch