EUR/GBP heading toward 0.8400 despite of disappointing ZEW survey

After initially struggling below 0.8400 handle, the EUR/GBP cross gained traction that assisted the pair to move within striking distance of 0.8400 handle. 

The EUR/GBP cross had a muted reaction to the release of higher-than-expected UK CPI print for June but held on to its early gains. UK June inflation report released by the Office for National Statistics on Tuesday showed inflation in June rose by 0.5% on a yearly basis. The reading was higher as compared to 0.4% expected and 0.3% recorded in May. The core CPI (excluding the volatile food, energy, alcohol, and tobacco items) reading also surpassed consensus estimates of 1.3% and came-in to show a rise of 1.4% vs previous month's 1.2%.

Meanwhile, the Germany ZEW Economic Sentiment for July plunged to show a negative reading of -6.8, which was far below 8.2 expected. The EUR/GBP cross, however, maintained its bid tone as the British Pound was weighed down by expectations of further monetary easing by BOE. 

Technical levels to watch

On the immediate upside, 0.8440-50 region remains immediate hurdle to clear, which if conquered seems to continue boosting the pair in the near-term, initially towards 0.8500 psychological mark and eventually towards its next major resistance near 0.8580-85 region. On the flip side, weakness below 0.8330-25 horizontal support is likely to drag the pair back towards 2-week lows support near 0.8250 before dropping further towards its next major support near 0.8200 handle.