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EUR/GBP recovers to 5-DMA after BOE rate decision

FXStreet (Mumbai) - Sterling suffered moderate weakness, helping the EUR/GBP pair trim losses to trade around the 5-DMA located at 0.7225 after the Bank of England (QE) left policy tolls unchanged.

BOE – No surprises

The BOE MPC voted 8-1 to keep rates unchanged as expected and once again reiterated low inflation in the short-term. However, the minutes noted the nominal wage growth appears to have flattened due to lesser working hours.

This may have weighed over Sterling and helped the EUR/GBP pair trim losses to trade around the 5-DMA. With the BOE event out of the way, the focus now would be on the US stock markets and the resulting demand for the safe havens/risk assets.

EUR/GBP Technical Levels

At 0.7225, the pair could rise to 0.7237 (50% of 0.7493-0.6981), above which the gains could be extended to 0.7261 (daily high), which, if taken out could open doors for 0.7278 (38.2% of 0.6931-0.7493). On the other hand, a break below 0.7212 (50% of 0.6931-0.7493), would expose the confluence of 100-DMA and 200-DMA at 0.7203-0.7198.

BoE kept rates unchanged at record low level

Bank of England’s decision is very much in tune with market expectation. The Bank of England, as expected left the rate unchanged at 0.5 per ent. Again, as expected MPC voted 8-1 to hold rates unchanged.
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USD: Correcting lower against other major currencies - MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the US dollar has extended its correction lower against the other major currencies in the Asian trading session as long speculative positions continue to be pared back ahead of next week’s FOMC meeting at which the Fed is expected to deliver a “dovish” rate hike.
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