EUR/GBP drops back to 0.7800, weekly trading range intact

The combination of selling pressure in the shared currency and a minor bounce in the British Pound has dragged the EUR/GBP pair to the vicinity of 100-day SMA important support near 0.7800 handle.

A fresh bout of US Dollar buying interest took the shared currency to weekly low levels. Meanwhile, the British Pound is finding support from better-than-expected UK trade balance data and now seems to have stabilized above 1.4450 level. 

Unlike the shared currency the EUR/GBP cross has held its weekly trading range and managed to hold its neck just above 100-day SMA. Increasing uncertainty over ‘Brexit’ referendum might restrict any sharp up-move for the pair, but a sudden turnaround in the sentiment surrounding the Euro might trigger some momentum play for the EUR/GBP cross.

Technical levels to watch

From current levels, weakness back below 0.7800 region (100-day SMA) is likely to find support near weekly swing lows near 0.7750 level. This is closely followed by support near 0.7730 horizontal area, below which the pair is likely to extend its weakening trend towards retesting 0.7665-60 strong support.

On the flip side, the cross needs to sustain its strength above 0.7860 level, above which the pair is likely to make a fresh attempt towards reclaiming 0.7900 handle. On a convincing strength above 0.7900 handle, the pair could be aiming to retest May highs resistance near 0.7945-50 area.