EUR/GBP corrects from multi-year highs, dips to 0.8550

After advancing to its highest level since August 2013, the EUR/GBP cross pared majority of its early gains posted on Wednesday and is currently trading around 0.8540-50 band. 

Earlier on Wednesday, the pair continued to build on to its recent sharp gains and jumped above 0.8600 handle to hit a fresh multi-year high level of 0.8617. The British Pound continues to underperform its European counterpart as the prevalent economic uncertainty over the historic Brexit referendum weighed on investor sentiment and kept sterling under intense selling pressure. 

The cross also benefitted from increasing prospects of further monetary easing by the Bank of England. BOE's Monetary Policy Committee (MPC) is scheduled to meet next week and market participants seem to prepare for possibility of a rate cut when the central bank announces the outcome of the meeting. 

In the meantime, short-term traders will take cues from some important economic events releases from the US that includes - FOMC meeting minutes on Wednesday and the crucial monthly employment data on Friday, which would have diverging effect on the GBP/USD and the EUR/USD major and eventually drive the EUR/GBP cross.

Technical levels to watch

Any further profit-taking move from current levels is likely to take immediate support near 0.8500 psychological mark. Weakness below 0.8500 handle, leading to a drop below 0.8485 level, seems to extend the corrective move towards back towards 0.8400 round figure mark. Meanwhile on the upside, the cross might continue to face some selling pressure around 0.8600 mark. However, a sustained move above multi-year high levels now seems to open room for further appreciating move for the pair in the near-term.