EUR/GBP dips below 0.8400 handle after UK services PMI

Extending its Tuesday's reversal from 0.8500 neighborhood, the EUR/GBP pair dipped below 0.8400 handle after the release of UK services PMI. 

UK services PMI matched flash estimates and came-in at 47.4, indicating sharp contraction in the post-Brexit regime. The reading provided some relief for the British Pound and led to extension of Tuesday’s reversal. 

On Tuesday, the pair stalled its three days of winning streak and reversed to erase all of its gains recorded in the previous two trading sessions. Further downside, however, seems limited ahead of Thursday's key event risk, BOE monetary policy decision, where majority of the consensus estimates are pointing towards a 25 bps of a rate-cut announcement by the central bank. 

Meanwhile, market participants remain divided over the prospects of additional quantitative easing, which now seems to fuel uncertainty and raises skepticism over further recovery for the British Pound. 

Technical levels to watch

On a sustained weakness below 0.8400 handle, the weakness is likely to get extended towards 0.8365-60 strong horizontal support. A decisive break below this strong support now seems to turn the pair vulnerable to extend its slide initially towards 0.8300 round figure mark and eventually towards July swing lows support near 0.8250 region.

Meanwhile on the upside, 0.8460 level now seems to have emerged as immediate resistance, which if conquered should open room for an immediate up-move towards 0.8500 psychological mark before the pair aim towards retesting post-Brexit daily closing highs resistance near 0.8580 level.