EUR/GBP threatens a firmer break below key support

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The pair came close to a major breakdown yesterday only for a late push higher in the day to see it close just below key support at 0.8866-67 – the close was at 0.8865.

I wouldn't call that a convincing break but sellers are keen to extend the downside as we get into European morning trade today. The pair is now making fresh lows close to 0.8840 and that is putting some pressure on the euro whilst lifting the pound.

Although the ECB meeting later may not offer much, the euro could still suffer a tumble if the key technical support level above starts to crack under selling pressure.

Just be mindful that the confluence of the key weekly moving averages in EUR/GBP sits at 0.8834-37 currently and that adds to the technical importance of the latest challenge for a potential downside break in the pair:

EUR/GBP W1 21-01

A break below the support levels mentioned leaves little in the way of a potential retest of 0.8700 next and that keeps the euro in a vulnerable spot towards the end of the week.

At the same time, the push higher here is underpinning the pound as cable now goes in search of a firmer break above 1.3700 – its highest levels since May 2018:

GBP/USD D1 21-01

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