- EUR / GBP trimmed a portion of intraday losses after the Bank of England announced its policy decision.
- The mention of negative rates in the policy statement acted as a headwind for the British pound.
- Improvements in GDP and inflation forecasts limited any significant gains for the crossover.
The crossing EUR/GBP It reversed the post-BoE slide to four-month lows and was last seen trading at modest losses, around the 0.8515 region.
The cross once again showed some resistance below the key psychological mark of 0.8500 and recovered more than 20 pips from daily lows after the Bank of England announced its policy decision. Unsurprisingly, the Bank of England kept its monetary policy setup unchanged, keeping interest rates and the Asset Purchase Ease unchanged at 0.1% and £ 895bn, respectively.
In the accompanying monetary policy statement, the UK central bank indicated its willingness to implement negative rates if necessary. The BoE further added that that does not mean that a negative rate is the preferred policy. Nonetheless, the negative rate talk turned out to be a key factor limiting sterling gains and extending some support to the EUR / GBP cross.
Meanwhile, there was only one MPC member, Michael Sanders, who disagreed with QE’s vote. This, coupled with improvements in short-term GDP growth and inflation forecasts, acted as a tailwind for the British pound. This, in turn, should contain any attempts to rally the EUR / GBP cross and warrants some caution for aggressive bull traders.
Market participants are now looking forward to the post-meeting press conference, where comments from Bank of England Governor Andres Bailey could instill some volatility and allow traders to seize short-term opportunities around the EUR cross. / GBP.
Technical levels
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
