EUR/GBP: upside capped on 0.85 handle, but for how long?

EUR/GBP has hit a roadblock on the upside after a strong rally that ensued after the UK data disappointed the more bullish on the economy, despite the Brexit vote.

EUR/GBP has rallied from 0.8427 to 0.8534 rallying in response to the release of weaker than expected CPI data for August—0.6% y/y vs. 0.7% expected.

"Domestic risk for GBP is set to remain elevated throughout the week as we look to Wednesday's employment (specifically wages) ahead of Thursday's retail sales and BoE policy decision (hold widely anticipated)," explained analysts at Scotiabank.

Major sterling weakness ahead of BoE - Scotiabank

EUR/GBP levels

Spot is presently trading at 0.8515, and next resistance can be seen at 0.8531 (Weekly Classic R1), 0.8533 (Daily Classic R3), 0.8537 (Daily High), 0.8596 (Weekly Classic R2) and 0.8683 (YTD High). Support below can be found at 0.8510 (Daily Classic R2), 0.8487 (Yesterday's High), 0.8475 (Daily 20 SMA), 0.8470 (Weekly High) and 0.8469 (Hourly 20 EMA)."Longer term the market remains on course for the .8815 February 2013 peak," suggested analysts at Commerzbank, adding, "Please note that we have various Elliott wave counts that suggest that the move will extend towards the 0.9250 area."