EUR/GBP slips below 0.8500 handle after German CPI

The EUR/GBP cross failed to sustain recovery move back above 50-day SMA, to a three-day high near mid-0.8500s, and came under some additional selling pressure following German CPI. 

The cross has now slipped below 0.8500 psychological mark after the preliminary reading of German CPI for the month on January came-in to show prices rose at yearly pace of 1.9%, falling short of 2.0% expected. Meanwhile, the broader HICP and monthly readings also disappointed markets.

Disappointing data attracted some additional selling pressure around the shared currency, which was already trading weak in wake of dovish comments from ECB's Nowotny that suggested that the ECB would review its current monetary policy stance in June but is unlikely to wind down its stimulus program.

Meanwhile, an offered tone around the GBP/USD major amid resurgent greenback buying interest, limited immediate sharp downslide, at least for the time being.

Technical levels to watch

Immediate downside support is seen at Thursday’s three week low, near 0.8470 level, below which the cross is likely to accelerate the slide towards monthly lows support near 0.8450 region before heading towards 0.8400 round figure mark.

On the upside, sustained move back 50-day SMA resistance near 0.8520-25 region, leading to a subsequent strength above 0.8550 level, is likely to assist the pair to surpass 0.8570-75 intermediate hurdle and head towards reclaiming 0.8600 round figure mark.