EUR/GBP: euro lags pound on German coalition and cross turns further negative

EUR/GBP was again choppy throughout the sessions on Tuesday, trading between 0.8754 (talk of stops below at 0.8744 July low) and 0.8786 in London after falling in Europe from an overnight high of 0.8801 in Asia.

EUR/GBP was offered at the start of this week on the political uncertainty after German election result with Merkel's CDU/CSU bloc performing the worst in a general election since 1949. Also, a combination of the German IFO survey and ECB's Coeure & Draghi's less than hawkish comments also weighed. The UK is seen to be a safer bet than the far-right & coalition in Germany and hence the heavy selling pressure in European trade. 

Where now for Federal Reserve policy? - ING

Yellen's dovish comments helped GBP/USD gain traction and pressured the cross as euro was left behind. Brexit negotiations got back underway again on Monday but there concerns that UK's PM May was too ambiguous in her 'olive tree' Florence speech. However, European Council President Donald Tusk was more reassuring  with his "damage control" comments:

EU's Tusk: Brexit is about damage control

EUR/GBP levels

Technically,  the 14th July low that is located at 0.8743. Still plenty of support between there and 0.8698 with the 55-week ma and the 200-day ma meeting the 2015-2017 uptrend.  Below 0.8700 could target the 0.8530/78.6% retracement of the move seen this year. Strong offers are located around 0.89 the figure.