Extending its sharp slide, EUR/GBP drops to over 3-½ month low

The British Pound extended its rally against its European counterpart, taking the EUR/GBP pair below last week's low to 0.7635, its lowest level since February.

Sterling bulls got a boost on fading worries over 'Brexit' as the latest poll from ORB International on EU referendum showed 55% support staying in the EUR while 42% voted to leave. On the other hand, the shared currency, Euro, was weighed down by an unexpected decline in Germany's economic sentiment as depicted by a sharp fall in German ZEW economic sentiment index.

The Pound also rallied on warning from the BoE Governor Mark Carney that a yes vote for 'Brexit' could be cause for an economic slowdown in the UK and could lead to a sharp fall in the British Pound.

From technical perspective, the pair has now declined to a fresh multi-month lows and hence, remains vulnerable to further downside. However, hourly RSI (H1 and H4) above 70 are pointing towards near-term oversold conditions and hence, warrants consolidation at current levels or a corrective bullish move.

Technical levels to watch

From current levels, attempts of recovery might now confront immediate resistance at a previous support break-point near 0.7665-60 area. Momentum beyond this immediate resistance might get extended, but seems more likely to be capped near 0.7700 round figure mark.

On the downside, 0.7610-0.7600 round figure area might extend some immediate support, below which the pair should extend its down-slide towards its next major support near 0.7550 region.