EUR/GBP continues negative streak below 0.8400

• EUR/GBP stays under 21-month lows in recent trade around 0.8390.
• Robust UK CPI data weighed on the pair's health.
• The euro area fresh COVID-19 spread keeps investors on their toes. 

The EUR/GBP pair returns below the 0.8400 level, extending the long negative streak and printing new 21-month lows around 0.8390.

The cross-currency pair is trading under pressure on the back of recently announced UK inflation data, paired with strong jobs report. Such improved data has sealed the deal for the Bank of England (BoE) to move ahead and implement a rate hike, diverting investors' attention back to the cable pair. It is worth mentioning the pound is among the best performers in G10 this week, and here it is seen weighing on the cross.

Experts broadly agreed that the inflation data supported the case for a BoE rate hike in December. According to Lloyds, though Consumer Price Index (CPI) "is still generally expected to start to ease back from H2 2022 onwards... an extended period of above-target inflation and indications that the labour market remained strong after the furlough scheme ended means that a Bank of England interest rate rise next month remains in play."

On the other hand, expectations remain that the European Central Bank (ECB) would stick to its dovish policy settings in the near term, keeping the sentiment around the euro undermined. The ECB's dovish stance cones in light of a slowing economy and as COVID-19 cases resurge throughout the continent.

Earlier on, ECB President Christine Lagarde said that tightening monetary policy to curb inflation could choke off the Eurozone's recovery. She further iterated factors pushing prices higher would fade next year, increasing contrast from hawkish hints from other central banks.

Investors also digest Eurozone inflation for October, which rose by 4.1% YoY, in line with expectations. The MoM figure is at 0.8%, also in line with estimations and failed to trigger any reaction in the EUR/USD. Additionally, both Austria and the Netherlands announced lockdown measures. Germany is also due to meet next week to discuss tightening standards as infections start to peak.

Looking ahead, traders will find impetus from Friday's UK Retail Sales data. In the meantime, ECB's Fabio Panettaa and Philip Richard Lane speeches will be closely watched for further motivation. 

EUR/GBP technical levels