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  • EUR/GBP witnessed some follow-through selling for the third consecutive session on Wednesday.
  • Comments by ECB’s Knot took its toll on the euro and led to the sudden drop seen in the last hour.

The emergence of some selling around the shared currency dragged the EUR/GBP cross to fresh eight-month lows, around the 0.8825 region in the last hour.

Following a brief consolidation through the first half of the trading action on Wednesday, the cross turned lower for the third consecutive session and extended its recent pullback from the 0.8920-25 supply zone. The latest leg of a sudden drop over the past hour or so was triggered by the ECB Governing Council member Klass Knot’s comments on the euro strength.

Knot said that the ECB is keeping a watchful eye on the exchange rate and added that the central bank has tools to counter any further appreciation. This comes on the back of a delay in the rollout of vaccines for the highly contagious coronavirus disease in Europe, which prompted some heavy selling around the common currency and exerted downward pressure on the EUR/GBP cross.

On the other hand, the British pound was seen consolidating the recent gains against its American counterpart and did little to influence the EUR/GBP cross. With technical indicators on the daily chart still far from being in the oversold territory, the cross seems poised to slide further below the 0.8800 round-figure mark amid absent relevant market moving economic releases.

Technical levels to watch