The EUR/GBP cross extended its retracement from yearly tops, near mid-0.8900s, and refreshed session lows during early NA session.
The British Pound continues to benefit from today’s surprisingly stronger UK labor market report, showing an unexpected drop in the unemployment rate and lower-than-expected claimant count change.
Adding to this, a steady Euro profit taking decline, through European trading session, further prompted traders to take some profits off the table, especially after the pair’s recent upsurge of nearly 200-pips in just five trading sessions.
The selling pressure, however, seems to have abated, for the time being, in wake of a swift recovery witnessed around the EUR/USD major following the release of the text of the Fed Chair Janet Yellen’s testimony.
However, with the post-UK jobs data fall extending further below the 0.8900 handle, a follow through long unwinding pressure, leading to continuation of the pair’s corrective slide, now seems a distict possibility.
Technical levels to watch
Immediate support on the downside is pegged near mid-0.8800s, below which the cross could extend the corrective slide further towards 0.8820-15 intermediate support en-route the 0.8800 handle.
On the upside, 0.8925 level now becomes immediate resistance, which if cleared could lift the cross beyond yearly tops resistance near mid-0.8900s, and 0.8975 hurdle, towards reclaiming the key 0.90 psychological mark.