FxWirePro: EUR/GBP resumes weakness after a brief pause, on track to test 200-DMA support

Chart - Courtesy Trading View 

EUR/GBP was trading 0.86% lower on the day at 0.8748 at around 14:15 GMT, slightly above session lows at 0.8718.

The pair has resumed weakness after a brief pause on Tuesday's trade and is poised for further downside.

The single currency was dumped on Wednesday after Credit Suisse's woes renewed worries about the European banking sector.

U.S.-listed shares in Credit Suisse Group hit fresh fresh record low after its top stakeholder, Saudi National Bank, ruled out offering more assistance.

Money markets have changed their bets on European Central Bank (ECB) rate hikes amid the banking turmoil. Lower ECB interest rate expectations dampen the euro.

Markets are now pricing in a 60% chance of a 25 basis point rate hike from the ECB on Thursday. Down from a 90% chance of a 50 bps hike earlier.

On the data front, Eurozone Industrial Production saw an upturn in January, suggesting that the manufacturing sector recovery is gaining traction.

Official data released by the Eurostats on Wednesday showed Eurozone’s Industrial Output jumped by 0.7% MoM vs. a 0.4% expected and -1.3% prior.

On an annualized basis, the Industrial Production arrived at 0.9% in January versus a -2.0% figure registered in December and 0.2% estimates.

Sterling showed little reaction to UK Budget, where U.K. Treasury chief Jeremy Hunt refrained from delivering any major surprises.

Major Support and Resistance Levels: 

Support levels - 0.8677 (200-DMA), Resistance levels - 0.8768 (110-EMA)

Technical Summary: EUR/GBP resumes downside after a brief pause, poised for further weakness. Momentum is bearish, volatility is high and rising. Scope for test of 200-DMA support at 0.8677.