EUR/GBP Slides on Tensions, GBP Carries the Day

The EUR/GBP exchange rate is experiencing losses for the third consecutive day, trading at 0.8555 as of Monday. The moderate risk-off mood amid growing tensions between the US and Iran may be favoring the British Pound (GBP). Analysts at ING attribute sterling's carry demand to its high volatility-adjusted currency in G10.

Despite strong economic activity data released on Friday for both the UK and Eurozone, the EUR/GBP has been unable to regain lost ground. The cross is expected to remain steady due to investor preference for the Pound's carry profile.

Technical analysis suggests that bears are likely to be tested at the August 19 low of 0.8550 area. A breach of this level could confirm a Double Top formation, with a measured target below the late July lows at 0.8483.