EUR/GBP slides to over one-week lows, around 0.8420 region

• The shared currency continues to underperform its British counterpart.
• The sterling gains traction following the release of UK economic data.
• Investors now eye BoE Governor Carney’s speech for a fresh impetus.

The shared currency remained on the defensive against its British counterpart, with the EUR/GBP cross falling to over one-week lows, around the 0.8425-20 region.

The cross extended previous session's rejection slide from levels just above the key 0.8500 psychological mark and witnessed some follow-through selling for the second consecutive session on Tuesday.

The British pound gained some positive traction following the release of slightly better-than-expected monthly UK GDP print and a modest rebound in the UK industrial/manufacturing production figures. In fact, the UK economic growth for December stood at 0.3% as compared to 0.2%. Meanwhile, the preliminary GDP print for the fourth quarter of 2019 matched consensus estimates and came in flat.

On the other hand, the already weaker sentiment surrounding the common currency deteriorated further on reports that the ECB's monetary policy review is unlikely to address the issue surrounding the inclusion of house prices while determining the inflation target. That may result in lower Consumer Price Index figures and therefore in lower interest rates for longer.

It will now be interesting to see if the cross is able to attract any buying at lower levels or the ongoing slide marks the resumption of the prior well-established bearish trend. Market participants now look forward to a scheduled speech by the BoE Governor Mark Carney, which might influence the GBP price dynamics and produce some short-term trading opportunities.

Technical levels to watch