EUR/GBP reverses post-ECB dip, sticks to modest gains around mid-0.8500s ahead of Lagarde

• EUR/GBP witnessed some selling after the ECB announced its monetary policy decision.
• Hints of a 25 bps rate hike in July disappointed some investors and weighed on the euro.
• Traders seemed reluctant to place aggressive bets ahead of the post-meeting presser.

The EUR/GBP cross quickly reversed an intraday dip to the 0.8530 region that followed the European Central Bank policy decision and was last seen trading just a few pips below the daily high.

As was widely expected, the ECB decided to leave its key rates unchanged at the end of the June monetary policy meeting this Thursday and said that it intends to hike rates by 25 bps in July. The announcement might have disappointed some investors anticipating a clear signal for a 50 bps raise at the next meeting, which, in turn, was seen as a key factor that weighed on the shared currency.

The downside, however, remains cushioned, at least for the time being as investors prefer to wait for ECB President Christine Lagarde's remarks at the post-meeting press conference. Market participants will look for clues about the pace of future policy tightening amid a continuous rise in inflationary pressures. This, in turn, would provide a fresh impetus to the EUR/GBP cross.

On the other hand, the British pound was undermined by the latest UK political jitters and modest US dollar strength. This might further contribute to limiting the downside for the EUR/GBP cross, suggesting that any meaningful slide could be seen as a buying opportunity.

Technical levels to watch