EUR/GBP rebounds to near 0.8420 ahead of BOE’s policy

• EUR/GBP has witnessed a pullback to near 0.8420 after intense selling pressure.
• Investors are waiting for the release of the monetary policy by the BOE.
• Euro bulls are underperforming amid weak Retail Sales.

The EUR/GBP pair has attracted some bids around 0.8400 after a significant sell-off from 0.8450. The cross tried hard to sustain above 0.8440 but failing to do so despite multiple attempts, dragged the asset lower to the round level support of 0.8400.

Pound bulls are waiting for the announcement of the monetary policy by the Bank of England (BOE) in the London session. BOE Governor Andrew Bailey is expected to spurt the interest rates by 25 basis points (bps). UK’s Consumer Price Index (CPI) number at 7% signifies a lot of inconveniences for households as higher energy bills and food prices have reduced the real income of the households already. It is worth noting that the BOE raised its policy rates by 50 bps in its last monetary policy meeting. The BOE is adopting a standard hawkish stance this time as a gradual rise would remain a better option to avoid any dramatic impact on the economy.

Meanwhile, the euro bulls are likely to remain uncertain as the European Union has spelled out plans to prohibit Russian oil within six months. Post-Russia’s invasion of Ukraine, the EU is determined to surrender its dependency on Russian oil. It would be interesting to watch out for how the EU will fulfill its bumper demand of 3.5 million barrels daily without Russian oil.

Apart from that underperformance of Euro Retail Sales, released on Wednesday has dented the euro’s demand. The Retail Sales landed at 0.8% lower than the market consensus of 1.4% and the prior print of 5.2%.