- Persistent selling around the Euro exerted some fresh pressure on the EUR/GBP cross.
- The British pound seemed rather unaffected by a big jump in the UK coronavirus deaths.
- The technical set-up favours bearish traders and supports prospects for a further decline.
The EUR/GBP cross to fresh three-week lows in the last hour, with bears now looking to extend the slide further below the 0.8800 round-figure mark.
Following the previous session’s good two-way price action, the cross met with some fresh supply on Wednesday and extended its recent sharp pullback from the 0.9500 psychological mark, or over 11-year tops set on March 19.
The downtick was sponsored by the prevailing selling bias surrounding the shared currency, all against the backdrop of mounting fears over the economic fallout from the coronavirus pandemic and the reemergence of the disinflationary trend.
On the other hand, the British pound seemed rather unaffected by the fact that Fitch lowered its UK long-term issuer default ratings to AA- from AA and a big jump in the UK coronavirus deaths, rising to 2352 on Wednesday from 1789 yesterday.
Given last week’s sustained break through an important horizontal support near the key 0.90 psychological mark, the pair’s ongoing slide to the lowest level since March 12 could further be attributed to some follow-through technical selling.
A subsequent weakness below the 0.8800 mark will reinforce the near-term bearish bias and set the stage for an extension of the pair’s depreciating move, possibly towards testing the next major support near the 0.8720-15 horizontal zone.
Technical levels to watch