EUR/GBP slide farther below 0.88 handle, hits fresh two-month lows

The EUR/GBP cross finally broke below an important horizontal support near 0.8775 level and fell to its lowest level since mid-July during early European session on Tuesday. 

Currently trading around the 0.8770-65 region, the shared currency's relative underperformance against its British counterpart could be attributed to disappointing German election results and Monday's weaker German IFO business climate survey. 

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This coupled with the ECB President Mario Draghi's cautious comments on Monday, blaming the recent volatility in exchange rates for uncertain outlook for inflation in the Euro-zone, further collaborated to the pair's offered tone. 

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Meanwhile, the British Pound continued with its post-hawkish BoE consolidative price action and did little to provide any fresh impetus, with the prevalent weaker sentiment around the common currency acting as an exclusive driver of the pair's fall to over two-month lows.

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In absence of any major market moving economic releases, traders would take cues from any fresh news coming out of the ongoing fourth round of Brexit talks. 

Technical levels to watch

Immediate support is pegged near 0.8750-45 zone, below which the cross is likely to accelerate the fall towards 0.8720 level ahead of the 0.8700 handle. On the upside, any recovery attempts above 0.8780 level might now confront fresh supply near the 0.8800 handle, above which the cross could extend the recovery towards its next major hurdle near the 0.8835 region.