- EUR/GBP saw some selling after the ECB announced its monetary policy decision.
- Indications of a 25 basis point rate hike in July disappointed some investors and weighed on the euro.
- Traders seemed reluctant to place aggressive bets ahead of the post-meeting press release.
The crossing EUR/GBP quickly reversed an intraday drop to the 0.8530 area that followed the European Central Bank policy decision and was last seen trading a few pips below the daily high.
As expected, the ECB decided to leave its interest rates unchanged at the end of the June monetary policy meeting on Thursday, saying it intends to raise rates by 25 basis points in July. The announcement might have disappointed some investors who were hoping for a clear signal of a 50 basis point hike at the next meeting, which, in turn, was seen as a key factor weighing on the shared currency.
However, the decline remains muted, at least for now, as investors prefer to wait for ECB President Christine Lagarde’s remarks at the post-meeting press conference. Market participants will be looking for clues as to the pace of future monetary policy tightening amid continued rising inflationary pressures. This, in turn, would give a new impetus to the EUR/GBP cross.
On the other hand, the British pound was hurt by the latest political fears in the UK and the modest strength of the US dollar. This could help limit the drop in the EUR/GBP cross, suggesting that any significant drop could be seen as a buying opportunity.
Technical levels
Source: Fx Street
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