OctaFX | OctaFX Forex Broker
Open trading account

EUR/GBP spikes to 0.7120 on dovish BOE, QIR

FXStreet (Mumbai) - The cross in the EUR/GBP spiked to fresh session highs above 0.71 barrier, after the pound dropped sharply in response to the dovish BOE minutes and quarterly inflation report (QIR).

EUR/GBP rises from 0.7060 levels

Currently, the EUR/GBP pair gains 0.74% to fresh session highs of 0.7119, bouncing-back firmly on the bids after the BOE events. The cross regained momentum after the British currency slumped nearly 70 pips in a knee-jerk reaction to the outrightly dovish BOE inflation report, which pushed back odds of a BOE rate hike until second half 2016.

The BOE policy decision remained unchanged for the 80th straight month along with the vote-split at 8-1. But it was the dovish inflation report that weighed heavily on the GBP.

The inflation report showed that the policymakers lowered both short and medium-term inflation outlook while noting that lower oil prices and sterling’s recent appreciation is likely to keep price pressures subdued.

Moreover, the renewed buying interest in the EUR/USD pair also boosted further upside in the EUR/GBP cross. Markets will continue to digest the BOE report and look forward to the US employment data due later in the NY session.

EUR/GBP Technical Levels

To the upside, the next resistance is located at 0.7140/55 (10-DMA/ 1h 200-SMA), above which it could extend gains to 0.7200 (round number). To the downside immediate support might be located at 0.7042 (daily low) below that at 0.6981 (June low).

QE could be extended, could cut rates - BOE’s Carney

The Bank of England governor Mark Carney, while speaking at the press conference, said the bank could extend its QE and could cut rates if the downside risks materialize.
Read more Previous

BOE QIR: Inflation and Growth forecasts lowered

The Bank of England, in its Quarterly Inflation Report (QIR), revised the 2015 and 2016 growth forecasts lower and fired warning shot regarding the disinflationary impact of a strong Pound.
Read more Next
Start livechat