EUR/GBP off three-week lows, finds some support near 0.8500 mark
- EUR/GBP witnessed heavy selling pressure for the fourth consecutive session on Tuesday.
- The GBP benefitted from easing of fuel crisis in the UK and an upward revision of UK PMI.
- A stronger USD weighed on the euro and contributed to the ongoing downward trajectory.
The EUR/GBP cross dropped to near three-week lows during the mid-European session, albeit managed to find some support near the key 0.8500 psychological mark.
The cross extended its recent rejection slide from the very important 200-day SMA – levels just above mid-0.8600s – and witnessed heavy selling for the fourth consecutive session on Tuesday. The British pound's relative outperformance comes amid signs of easing fuel crisis in the United Kingdom.
The government announced on Monday that armed forces will begin delivering petrol to garages across the UK. The Petrol Retailers Association, which represents nearly 5,500 of the UK's 8,000 filling stations, said that the crisis is virtually at an end in Scotland, Wales, the North and Midlands.
Apart from this, an upward revision of the UK Services PMI for September further acted as a tailwind for the sterling. In fact, the gauge was finalized at 55.4 for the reported month, up from the 54.6 in the flash estimate. Adding to this, the Composite PMI was also revised to 54.9 from the 54.1 prelim reading.
On the other hand, the shared currency was pressured by a modest pickup in the US dollar demand. Apart from this, a sustained break below a short-term ascending trend-line support, near the 0.8535 region, aggravated the bearish pressure surrounding the EUR/GBP cross and contributed to the ongoing decline.
However, oversold RSI (14) on hourly charts held investors from placing fresh bearish bets and assisted the EUR/GBP cross to defend the 0.8500 mark, at least for now. The mentioned handle coincides with September monthly swing lows and should now act as a key pivotal point for short-term traders.
Technical levels to watch