EUR/GBP trims losses after BoE meeting

• The Bank of England kept rates unchanged as expected.
• The Pound rose modestly across the board, reaching fresh daily highs against the US Dollar and trimmed losses against the Euro.
• EUR/GBP encounters resistance at 0.8730, while key support levels are located at 0.8700 and 0.8680.

Following the Bank of England meeting, the Pound gained momentum. The EUR/GBP pair trimmed its daily losses and moved lower towards the 0.8700 level.

Pound rises after BoE

As expected, the Bank of England (BoE) decided to keep its bank rate unchanged at 5.25%. However, three members of the Monetary Policy Committee (Greene, Haskel, and Mann) voted in favor of a 25 basis points rate hike. The BoE's forecast indicates an expected inflation rate of 3.1% in one year, up from the previous forecast of 2.8%. The growth projection for the current year remains at 0.5%, while the forecast for the following year was revised downward from 0.5% to 0%.

Governor Andrew Bailey stated that it is too early to consider rate cuts and that the BoE is closely monitoring the situation to assess whether further rate hikes are necessary. The BoE Monetary Policy Report Press Conference is scheduled to begin at 12:30 GMT.

Following the decision, the Pound strengthened across the board. The EUR/GBP pair trimmed its gains and declined from 0.8725 to 0.8707. However, the cross still remains in positive territory for the day and above the 0.8700 level.

Levels to watch 

The EUR/GBP has an immediate support area around 0.8700, and if this level is broken, it would expose the next support zone at 0.8680. This level is crucial as it has acted as a significant barrier to further downside movement over the past two weeks. A sustained move below 0.8680 would strengthen the outlook for the Pound.

On the upside, if the pair manages to stay above the daily high at 0.8725, the next resistance area to watch for is at 0.8740. Beyond that, the October high at 0.8754 becomes the next significant level.