EUR/GBP advances to 2-week highs above 0.88 as GBP sell-off intensifies

• Disappointing PMI data from the UK continue to weigh on the GBP.
• Brexit uncertainty persists with backstop issue remaining unsolved.
• GBP/USD's sharp fall provides an additional boost.

The EUR/GBP pair gained more than 40 pips in the last hour to reach a fresh 2-week high of 0.8818. As of writing, the pair was trading at 0.8812, adding 0.5% on a daily basis.

The pair's upsurge on Tuesday seems to be fueled by the heavy selling pressure surrounding the British pound. Earlier in the day, the data published by the IHS Markit revealed that the UK's largest sector, service, continued to lose momentum in January with the PMI data dropping to 50.1 from 51.2 and falling short of the market expectation of 51.

On the other hand, with no clear signs of British Prime Minister Theresa May coming up with an alternative plan to the Irish backstop issue, markets remain nervous ahead of Thursday's meeting between PM May and the EC President Jean-Claude Juncker and continue to hurt the GBP. Additionally, the sharp dropped witnessed in the GBP/USD pair put some extra weight on the GBP's shoulders and allowed the pair to push higher. 

Meanwhile, the BoE is scheduled to announce its interest rate decision and release its monetary policy statement on Thursday, which may be another factor why investors are staying away from the GBP.

Technical levels to consider