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EUR/GBP homing in on 0.7900

FXStreet (London) - Following the ECB decision to cut rates to 0.05% from 0.15%, while the BoE held firm at 0.5%, EUR/GBP has declined sharply today, with 0.7900 in focus.

ECB trims, BoE holds

With the BoE holding policy as expected, the main focus of the day fell on the ECB’s decision to trim rates from 0.15% to 0.05% record lows. In the current press conference, Draghi has commented that the ECB has decided to start ABS purchases aimed at facilitating credit flows to the European economy. The measures are set to start on October 2nd, and will have a sizeable effect on the ECB balance sheet. Further, he added that the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate.

EUR/GBP price action

Having traded in a tight range overnight, sitting above the daily pivot point at 0.7983. However, with the ECB rate cut, spot dived dramatically from a morning high at 0.7992, to a low at 0.7913. While near term momentum looks to have steadied the decline, the rest of Draghi’s speech and presser will be watched closely to see if 0.7900 will be tested.

EUR/GBP Levels

Current price is 0.7919, with resistance ahead at 0.7934 (Weekly Classic PP), 0.7940 (Daily Classic S3), 0.7946 (Hourly 100 SMA), 0.7952 (Hourly 200 SMA) and 0.7952 (Daily Classic S2). To the downside we see next support at 0.7914 (Daily Low), 0.7905 (Monthly Low), 0.7905 (Weekly Low), 0.7892 (YTD Low) and 0.7891 (Annual Low).

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