EUR/GBP struggling for a firm direction ahead of BOE

The EUR/GBP cross continued with its struggle to build on to its recovery momentum and remained stuck around 0.8500 handle following the release of EU CPI and UK retail sales data. 

The final print of the Euro-zone CPI for August came-in at 0.2% y-o-y, which was in-line with consensus forecast and initial estimates. Meanwhile, UK retail sales for the month of August contracted by 0.2% m/m but was slightly better-than-expected contraction of 0.4%. 

The cross had a tepid reaction to the economic releases as markets keenly await for BOE monetary policy decision, which would retain the center-stage on Thursday. The central bank's assessment of post-Brexit economic conditions would be looked upon to evaluate the possibilities of further monetary easing, which would eventually trigger a fresh bout of volatility across GBP pairs.

Technical levels to watch

On a sustained move above 0.8500-0.8510 immediate resistance, the recovery momentum is likely to get extended towards 0.8535-40 horizontal resistance, which is followed by resistance at 0.8565 horizontal area. Meanwhile on the downside, decisive break below session low support near 0.8470-65 region, the cross seems to head back towards testing 50-day SMA support near 0.8425-20 region.