- EUR/GBP soars to a new weekly high in reaction to selling around the British pound after the BoE.
- The BoE raises interest rates by 50 basis points and indicates that monetary policy is not on a pre-established path.
- Investors are now awaiting the BoE Governor’s comments for further momentum.
The crossing EUR/GBP it has spiked sharply from the 0.8345 area and has reached a new weekly high near 0.8420, following the announcement of the Bank of England’s monetary policy decision. The crossing is currently above the level of 0.8400while attention now turns to the post-meeting press conference.
As expected, the Monetary Policy Committee (MPC) of the Bank of England voted unanimously to raise the reference rate by 50 basis points (the highest since 1995) to 1.75%, the highest level since the end of 2008. The British pound, however, is witnessing a typical “buy the rumour, sell the fact” trade as the huge rate hike was already priced in in the markets.
Furthermore, the UK central bank, in the accompanying policy statement, said that monetary policy is not on a pre-established path. This was accompanied by a warning that a UK recession will start in the fourth quarter and will last until next year, suggesting that the BoE could take a more gradual approach to raising interest rates.
The above factors weigh on the British pound and continue to support the strong intraday move in EUR/GBP. Market participants are now awaiting comments from BoE Governor Andrew Bailey for further clues on further rate hikes. This, in turn, would play a key role in influencing the EUR/GBP cross.
EUR/GBP technical levels
Source: Fx Street
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