EUR/GBP retreats sharply from six-day highs, back under 0.8350

• EUR/GBP still on its way to post the first gain in five days.
• Upside capped by the 20-day simple moving average.

The EUR/GBP jumped on Tuesday from two-week lows near 0.8300 to 0.8382, reaching the highest level since last Wednesday. On American hours it is pulling back, trading back under 0.8350, after being unable to hold above the 20-day simple moving average (0.8370).

From Ukraine to BoE comments

The pound weakened earlier on Wednesday following comments from Bank of England deputy governor Dave Ramsden. He said that “some further modest tightening in monetary policy is likely to be appropriate in the coming months”. His words were seen as less hawkish compared to his previous comments. A surprise approached considering that the latest economic report from the UK was firm.

The crisis in eastern Ukraine took another step on Wednesday. Sanction from the European Union and the US are expected to be announced at any time. An escalation of the conflict could weaken the euro further.

Key levels

A daily close above 0.8370 in EUR/GBP should clear the way for a test of the 0.8400 area that also contains the 55-day moving average. A recovery above should alleviate the bearish pressure. The next resistance stands at 0.8425/30.

On the downside, 0.8330 is again a support level to consider, followed by the 0.8300/05 zone. A consolidation below 0.8300 would point to more losses.

Technical levels