EUR / GBP remains on the defensive, capped below 0.8550

• The euro fails to recover 0.8550 and depreciates for the third day in a row.
• EUR / GBP is approaching the relevant support levels at 0.8525 and 0.8500.

The EUR’s attempt to rally from intraday lows at 0.8530 has been limited to the previous support area around 0.8550. The pair continues to decline for the third day in a row against a firmer British pound.

The British pound prolongs last week’s recovery

The pound is showing strength on Monday, extending its rally from recent lows against the euro and the dollar in a risk-free market session. The EUR/GBP it has depreciated beyond 1% so far in a three-day losing streak, to approach the two-week lows at 0.8525.

In the absence of key macroeconomic events, and with the Chinese and South Korean markets closed on public holidays, the British pound appears to have made better use of a softer USD to cut past losses. The pound has ignored earlier weakness sparked by concerns about the post-Brexit fallout and its impact on the UK’s growth prospects.

On the other hand, some deterioration in the eurozone growth prospects amid rising energy prices, confirmed by a recent series of key fundamentals, and the monetary policy differential between the ECB and the Federal Reserve are affecting to the common currency in all areas.

EUR / GBP: The next support is at 0.8525

From a technical perspective, the EUR / GBP is approaching some relevant support levels at 0.8525 (September 20-28 lows) and 0.8500 (September 16 lows). Down here, the pair would face a year-to-date low at 0.8450 (Aug 10 low)

On the downside, a relevant recovery attempt should regain the 100-day SMA at 0.8565 to advance above 0.8600 and launch another attack on a key resistance area at 0.8660 / 70 (May 25, May 20 highs). July and September 29)

Technical levels