EUR/GBP reverses from one-year lows, rises toward 0.8550

• EUR/GBP finds some decent support above 0.8500.
• Strong recovery of the euro could point to some consolidation head.

The EUR/GBP pair dropped earlier on Monday to 0.8505, reaching the lowest level since February of last year. It then rebounded with the euro gaining speed during the American session. As of writing, it trades at 0.8535/40, still down for the day but significantly of lows.

The area above 0.8500 capped the decline of EUR/GBP that then staged a strong recovery. The main trend continues to point to the downside, but the negative tone eased after the 40-pip recovery.

No particular event triggered neither the decline of the bounce. The latest development in the UK includes an improvement in COVID-19 numbers and a statement from Bank of England MPC member, Gertjan Vlieghe who sounded dovish, mentioning that some quarters of growth should alter the monetary policy stance.  

The correction in GBP/USD weighed on the pound. The pair dropped back under 1.3800, erasing all daily gains. At the same time, EUR/USD remained sideways between 1.1760 and 1.1780.

Technical levels