EUR/GBP subdued around 0.8565 level after German IFO

The EUR/GBP cross 

traded with bearish bias for the third consecutive session and failed to gain any respite from disappointing release of German IFO index.

Currently trading around 0.8565-60 band, the cross had a muted reaction to German IFO business climate index that dropped to 109.8 in Jan. as compared to previous month’s reading of 111.00 and 111.3 expected. 

However, a slight improvement in current conditions indicator, to 116.9 from previous month's 116.7, although marginally missing expectations, seems to have provide some support to the shared currency and limiting any sharp slide, at least for the time being.

Meanwhile, also collaborating to the pair’s offered tone is abating British Pound selling pressure as market seems to have digested Tuesday's UK Supreme Court ruling to seek parliamentary approval before triggering Article 50 of the Lisbon Treaty and begin the process of ending Britain's membership with the European Union.

Technical levels to watch

A follow through selling pressure is likely to accelerate the downslide towards 50-day SMA support near 0.8530 region, which if broken has the potential to continue drag the cross back towards 0.8500 psychological mark.

On the flip side, any recovery move above 0.8585 level, leading to a move above 0.8600 handle, might continue to confront strong resistance near 0.8650 region above which a fresh bout of short-covering is likely to lift the cross beyond 0.8670-75 intermediate resistance towards 0.8700 round figure mark.