EUR/GBP drops below 0.8400 for the first time since February 2020
The pivotal level to watch on the day will be the 26 October low @ 0.8403 as the key support level, in which a break below that will solidify added downside momentum.
The pair saw its recent bounce capped by key trendline resistance and the 200-day moving average (blue line) and since then, sellers have took charge and we are seeing that momentum continue as BOE rate hike expectations are rebuffed this week.
A decent labour market report yesterday coupled with the inflation data earlier pretty much tees the BOE up to salvage its reputation going into the December meeting.
In case you missed it, Bailey & co. did their impression of being the "bad boyfriend" earlier this month here. Given the data deluge over the past week, it is hard to see them not act in December considering their communique. But we'll see though.
For now, the market is slowly believing in that and the pound is finding a bit of base as such - keeping gains against the euro as the single currency is looking vulnerable amid a lack of support on the way down for EUR/USD.
A solid break/close below 0.8400 sets the stage for sellers to drive EUR/GBP back towards 0.8300 - a key level that has held declines since December 2016.
