EUR/GBP erases Wednesday’s gains, slides to 0.8500 handle

A bout of short-covering wave around the GBP/USD major exerted an immediate selling pressure on the EUR/GBP cross, which has now erased all of its Wednesday's gains and dropped to 0.8500 handle. 

The British Pound gained traction and outperformed its European counterpart after UK manufacturing and industrial production data contracted less than what was expected. The cross extended its slide as the shared currency continued with its struggle against the greenback and remained below the very important 200-day SMA. 

The next big fundamental trigger for the cross would be next week's BOE Governor and MPC members' testimony on inflation and the economic outlook before Parliament's Treasury Committee on Tuesday, ahead of the BOE's first monetary policy meeting, after the historic Brexit referendum, on Thursday.

Technical levels to watch

On a sustained weakness below 0.8500 handle, the cross is likely to extend its corrective move towards its next major support near 0.8400 level. Meanwhile on the upside, 0.8550 now seems to act as immediate resistance. However, major upside resistance remains near 0.8600 handle and only a decisive move above this important resistance would negate possibilities of any near-term corrective move.