EUR/GBP extends corrective slide to 0.88 handle

The British Pound extended upbeat UK CPI-led up-move, dragging the EUR/GBP cross to fresh session lows near the 0.8800 handle.

Spot extended its corrective slide from fresh yearly highs touched in the previous session after the latest headline UK CPI print surpassed expectations (2.7%) and came-in to show a y-o-y price rise of 2.9%, the highest level since April 2012.

Against the backdrop of uncertainty around the Brexit negotiations and the latest UK political jitter, today's strong reading might have done little to warrant any immediate action from the BoE but triggered a short-covering bounce across GBP cross.

   •  UK consumer price inflation at 2.9% yet little prospect of BoE action - ING

Also collaborating to the pair's corrective fall was a slight disappointment from the German ZEW Economic Sentiment Index, unexpectedly edging lower to 18.6 for June as against 21.5 expected and 20.6 previous. 

The slide, however, seems to have stalled, at least for the time being, amid a modest recovery in the EUR/USD major as focus now shifts to other important economic data/events scheduled during the course of this week. 

Wednesday's economic docket features the UK monthly jobs report, while on Thursday UK monthly retail sales and BoE monetary policy decision would remain in spotlight ahead of the final Euro-zone CPI print on Friday. 

Technical levels to watch

A follow through retracement below the 0.8800 handle, the cross is likely to extend the slide towards 0.8770 horizontal support before eventually dropping to 0.8725-20 support area.

On the upside, 0.8845-50 region now becomes immediate strong hurdle, which if conquered is likely to set the stage for continuation of the pair’s strong up-move further towards the 0.8900 handle en-route 0.8930-35 resistance.