EUR/GBP drops to fresh one-month low after UK services PMI

The EUR/GBP cross erased its early tepid recovery gains to 0.8400 handle and turned back lower to resume with its near-term corrective move following the release of stronger-than-expected UK services PMI print. 

Currently trading at a fresh one-month low around 0.8360, lower for fifth straight session, the British Pound attracted fresh buying interest across the board after the UK services sector, along with manufacturing and construction sector, witnessed a solid rebound in August. Following a sharp contraction in July on the back of the historic Brexit referendum, the Markit/CIPS UK services PMI jumped back into expansion territory and came-in at 52.9 in August, which was better-than 50.0 expected and 47.4 recorded in July. 

The pair thus extended its near-term corrective slide and has now moved within striking distance of August monthly lows support near 0.8344. A follow through selling pressure is likely to turn the pair vulnerable to continue drifting lower in the near-term.

Technical levels to watch

Weakness below 0.8350-45 immediate support is likely to drag the pair immediately towards 0.8300 round figure mark before the pair drops towards testing 100-day SMA support near 0.8225-20 region. On the flip side, only a sustained move back above 0.8400 handle might assist the pair to stage some additional recovery towards a previous strong support, now turned resistance, near 0.8430-35 area.