EUR/GBP slammed back below 0.87 handle after ECB said to cut inflation forecast

The EUR/GBP cross came under some renewed selling pressure on Wednesday and slipped back below the 0.8700 handle to fresh weekly lows. 

Spot failed to build on yesterday's sharp recovery move from sub-0.8700 level, led by the latest YouGov UK election model results that showed Conservatives falling short of an overall majority by 22-seats, and accelerated the fall after Bloomberg broke a story suggesting that ECB might cut its inflation forecast through 2019 due to weaker energy prices.

   •  ECB forecasts said to cut inflation outlook through 2019 - BBG

Heading into Thursday's ECB monetary policy decision, anticipated dovish outlook attracted some fresh selling pressure around the shared currency and has been an exclusive driver of the pair's sharp slump in the past hour or so.

Meanwhile, investors seemed reluctant to initiate/carry big GBP positions ahead of the UK general election on Thursday. Hence, unwinding trade also seems to have collaborated towards aggravating the selling pressure and dragged the cross to session low near 0.8690-85 region. 

   •  UK: Its all about election day now - SocGen

Technical levels to watch

A follow through weakness now seems to continue dragging the cross further towards 0.8660-55 support area en-route 0.8630 horizontal level. 

On the flip side, any up-move back above the 0.8700 handle now seems to confront fresh supply near 0.8735 level, which if clear might lift the cross back towards multi-week highs resistance near 0.8770 region.