EUR/GBP spikes closer to mid-0.8400 post-BOE

The EUR/GBP cross extended its recovery move and spiked to a two-day high level near mid-0.8400s following the BoE announcement.

As was widely expected, the central bank maintained status quo and left rates, and asset purchases, unchanged at 0.25% and £435 billion respectively. Meanwhile, the minutes of the meeting revealed MPC members voted 7-1 to leave rates unchanged, with Forbes maintaining her call for a hike.

Looking at the finer details, the central bank lowered its GDP forecast for 2017 to 1.9% from 2.0% and attracted some fresh selling pressure around the British Pound. A slight dovish tilt added to today’s dismal UK manufacturing data and kept pushing the cross higher. 

The cross, however, lacked follow through momentum amid subdued action surrounding the shared currency, with the EUR/USD pair reversing early gains and trading absolutely flat for the day.

Levels to watch

Immediate resistance is pegged near 0.8485 level above which the cross is likely to aim towards reclaiming the key 0.85 psychological mark. On the downside, 0.8420 level now becomes immediate support to defend, which if broken could drag the pair back towards the 0.8400 handle.