EUR/GBP recovery gains momentum, now flat at 0.8350

The EUR/GBP pair's recovery from 0.8300 seems to gain momentum with the pair now erasing all of its early losses to currently trade absolutely flat around 0.8350 region.

Earlier on Wednesday, the pair extended its reversal from a multi-year high level of 0.8617 touched in the previous week and dropped to a 9-day low level near 0.8300 region. The pair, however, managed to recover from lower levels as the British Pound remained suppressed on expectations of further monetary easing by the Bank of England. BOE's MPC is scheduled to meet on Thursday for the first time after last month's historic Brexit vote.

A virtually empty economic calendar is unlikely to provide any fresh trigger for traders and the cross might continue to take cues from any additional news flow surrounding the Brexit referendum and expectations about BOE monetary easing.

Technical outlook

A team of analysts at XM Investment Research notes, "If support at 0.83 fails to hold, this would accelerate a decline towards 0.8116, the April 7 high. This level is also the 50% Fibonacci retracement level of the upleg from 0.7600 to 0.8627 (June 24 – July 6 rally) and would be another key support level. A drop below this would shift the bias to bearish."

"Alternatively, if prices bounce back up from 0.83, there is scope to target last week’s high of 0.8627 and then the bullish trend would continue above this peak."

"The overall outlook remains bullish as the 50-day moving average has crossed above the 200-day moving average, giving a bullish signal."