EUR/GBP drops below 0.8800 to snap four-day uptrend, Russia, BOE’s Bailey in focus

• EUR/GBP prints the first daily negative in five, grinds lower of late.
• Escalating fears of Eurozone recession, mixed political headlines from BOE keep sellers hopeful.
• BOE’s Bailey will face a tough task during his trip to Washington.
• Russia responds to Crimean bridge explosion by blowing Ukrainian President’s office.

EUR/GBP fails to extend the four-day uptrend as it stays depressed near 0.8785 heading into Monday’s European session. In doing so, the cross-currency pair justifies the escalating fears of the Eurozone’s recession while trying to take positives from the mixed headlines from Britain.

As per the latest update, the Bank of England (BOE) launches multiple intermediate measures to unleash liquidity into the UK market. Among the key measures discussed, the alterations in the repo facility will be important and can help the “Old Lady”, as the BOE is often called.

Elsewhere, the fears of EU recession amplified after Russia’s reaction to the Crimean bridge explosion. Recently, the BBC came out with the news suggesting multiple large explosions hit Kyiv, marking it the first tragic event in months. It’s worth noting that the missiles also destroyed Ukrainian President Volodymyr Zelensky's office.

While the UK is likely benefiting from the bloc’s fears of a pause in the European Central Bank’s (ECB) hawkish move, doubts over the BOE’s ability to tame the financial crisis triggered by chancellor Kwasi Kwarteng’s September 23 fiscal announcements can keep the EUR/GBP buyers hopeful. Furthermore, political pessimism in Britain also propels the cross-currency pair.

Moving on, the aforementioned risk catalysts and the UK’s employment data can entertain the EUR/GBP traders ahead of Friday’s speech of BOE Governor Andrew Bailey. If Bailey fails to defend his latest surprises, the EUR/GBP may have further upside to track.

Technical analysis

EUR/GBP retreats from the one-month-old support-turned-resistance line, around 0.8815 by the press time, as it directs bears towards June’s peak surrounding 0.8720.