EUR/GBP sits at over 2-week lows ahead of EZ CPI

   •  Extends overnight bearish break below 100-DMA support.
   •  Weighed down by a goodish pickup in GBP demand.
   •  Final EZ CPI print eyed for some immediate respite for bulls.

The EUR/GBP cross struggled to build on its early uptick to an intraday high level of 0.8839 and dropped to fresh session lows in the last hour, albeit quickly recovered few pips thereafter.

The cross extended last week's sharp retracement slide from the 0.8970 region and extended overnight bearish break below 100-day SMA strong support. The pair traded with a negative bias for the eighth session in the previous nine and the latest leg of a sharp slide during the early European session could be attributed to a sudden pickup in the GBP demand.

This coupled with the ECB President Mario Draghi's dovish comments this week further collaborated to the shared currency's underperformance against its British counterpart and the pair's fall to over two-week lows. 

The fall, however, lacked any fresh fundamental trigger and turned out to be short-lived, at least for the time being. Bulls will be looking for the final EZ CPI print for any deviation to the upside, which could revive hopes over a possible ECB QE tapering and provide some immediate respite. 

Technical levels to watch

A follow-through weakness below 0.8815-10 area is likely to accelerate the fall towards 0.8780-75 support area before the cross eventually drops to its next major support near the 0.8735 level. 

On the upside, 0.8835 area now seems to have emerged as an immediate resistance and is followed by 100-day SMA hurdle near mid-0.8800s, above which the cross could make a move back towards the 0.8900 handle.