EUR/GBP turns bearish and drops to 0.8425

EUR/GBP  broke earlier below 0.8450 and then extended the slide below Friday’s lows. Recently it bottomed at 0.8426, hitting the lowest level since Thursday. The pair has erased all gains that followed the decision of the European Central Bank and Draghi’s press conference.

During the current week, eyes will turn to the United Kingdom, where key economic data will be released (retail sales, employment, and inflation) and also the Bank of England will decide on monetary policy.

Short-term outlook

After reaching on Thursday a 1-week high at 0.8497, the EUR/GBP pair turned to the downside. The euro weakened after approaching the 0.8500 zone, signaling an interim peak.  Short-term technical indicators point toward an extension of the downside. But a rally above 0.8500 would change the outlook, and would support the euro. Support levels could be seen at 0.8425 (daily low), 0.8405 (Sept 05 high) and 0.8385 (Sept 06 high).