EUR/GBP Slides Sharply to 0.7860 After BOE Announcement
After fading its spike to 0.7919, touched during early European session, the EUR/GBP pair extended it slide to fresh 7-day low level of 0.7858 immediately after BOE policy announcement.
The BOE let its bank interest rates unchanged at record low level of 0.5% and the size of the asset purchase program at £375 billion. The key outcome of the meeting was that the MPC voted unanimously to leave its bank rates and asset purchase program unchanged. Immediately after the announcement, the British Pound surged across the board taking the EUR/GBP pair towards the mid-point of 0.7800-0.7900 handle.
Meanwhile, in its quarterly inflation report, the central bank slashed its Q2 growth forecast to +0.3% vs +0.5% estimated previously, which capped further gains for the British Pound. The EUR/GBP pair is currently trading at 0.7870 level, off day’s through and above 20-day SMA support.
Investors will now turn focus to BOE Governor Mark Carney’s presser that would set the tone for pound traders.
Technical levels to watch
On a sustained weakness below 0.7865 and a subsequent break below day’s through, the pair could be aiming towards its next major support near 0.7785-80 horizontal zone.
On the upside, the pair now needs to move back above 0.7900 and extend its momentum beyond 0.7925 strong resistance in order to increase the prospects of further up-move towards reclaiming the very important 0.8000 psychological mark.