EUR/GBP hits fresh daily lows near critical support area of 0.8420

• Euro under pressure as focus turn to Thursday’s European Central Bank meeting.
• EUR/GBP remains sideways near monthly lows, under 0.8470.

The EUR/GBP turned to the downside after being unable to hold above 0.8460 and recently printed a fresh daily low at 0.8426. The cross remains near the lows with a bearish bias but is above the strong support area at around 0.8420.

The euro is among the worst performers on Monday ahead of Thursday’s European Central Bank meeting. Weaker-than-expected German economic data and the EUR/USD of a multi-day range weighed on EUR/GBP.

The ECB meeting is probably the key event for EUR/GBP of the week. “There will be plenty of speculation regarding the end of the PSPP and some form of increasing the PSPP purchase. We expect ECB to flag risks to the outlook and as such not deviate from the current baseline and send new policy signals already now but wait for a new projections round in December”, explained analysts at Danske Bank. The fact there is no unanimous expectation about what the ECB might do or say, will likely trigger volatility in euro’s crosses on Thursday and keep them exposed to rumours prior to the announcement.

From a technical perspective, the EUR/GBP chart shows risk tilted to the downside. While above 0.8420 losses seem limited; a break below should clear the way for a test of 0.8400. A firm recovery above 0.8475 should alleviate the bearish pressure. The next resistance stands at 0.8515.

Technical levels