Fresh Cycle Lows Registered, Next Week's BoE Pivotal

EUR/GBP is little changed around GBP0.8430 at typing. Tuesday saw the cross register another fresh cycle low, with the relative rate dynamic and positive risk tone evident in equities allowing the GBP to outperform the EUR, triggering wider GBP demand.

• The move ran out of steam just above the GBP0.8400 mark, as broader GBP demand faded. Our technical analyst notes that the cross remains vulnerable, with a breach of the Oct 21/22 low (GBP0.8422) confirming the resumption of the current downtrend. A break through psychological support at GBP0.8400 would expose the 1.0% 10-DMA envelope (0.8363). Initial firm resistance is seen at the 20-day EMA (GBP0.8483).
• The UK budget provides the focal point of the regional docket on Wednesday, although a lot of details surrounding that particular event have already been released/leaked. The upcoming BoE monetary policy decision (scheduled for next Thursday) will be key for the trajectory of the cross into year-end given the relative rate-driven nature of the recent move.