EUR/GBP pares early gains, drops back to 0.7925

The EUR/GBP cross seems to repeat Monday's price action, initially surging to 0.7975 and then erasing majority of the gains, to currently trading at 0.7920.

The pair continues to benefit from 'Brexit' worries that have been weighing on the British Pound. The pair on Monday reacted to weekend poll that increased the prospects of victory for the 'Leave' camp. Meanwhile, concern over Chinese economic slowdown also extended support to the funding currency, Euro. 

On Tuesday, the pair stalled its bullish momentum and pared early gains despite of weaker UK CPI print and better-than-expected Euro-zone industrial production data as the shared currency came under intense selling pressure against the greenback.

However, mounting pressure on the much awaited event risk of UK-EU referendum on June 23 is likely to restrict any sharp slide for the EUR/GBP cross ahead of UK employment report on Wednesday and BoE monetary policy decision on Thursday.

Technical levels to watch

From current levels, a sustained weakness below 0.7900 might negate bullish bias, dragging the pair immediately towards 0.7850 horizontal support ahead of the very important 100-day SMA support near 0.7800 region. On the flip side, the pair has repeatedly failed to sustain its bullish momentum above 0.7950, which if conquered decisively might now assist the pair to easily scale through 0.8000 handle and head towards April daily closing highs resistance near 0.8090-95 region.