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EUR/GBP Broke Support After Rate Decisions

The Bank of England and the ECB made their expected decisions: BoE lowered the interest rate to 1%, and Jean Claude Trichet left the interest rate unchanged at 2%. The immediate result in the forex market was a big drop of EUR/GBP, currently trading at 0.8780.

When looking at the hourly forex charts for the EUR/GBP, this fall can be easily seen. It is already below the low value on February 2nd, and is at its lowest levels in two months.

eur/gbp falling after rate decisions february 5 2009

Mervyn King’s BoE lowered the interest rate to another historic low – 1%. This was widely expected by traders. So the current trend of strengthening in the GBP/USD continued.

On the other hand, the European Central Bank also met expectations and left the rate at 2% – so also here the current trade of a weakening Euro continue. EUR/USD probably fell due to Russia’s downgrade. More details here.

Technical note: if this fall is persistent, EUR/GBP has lots to fall, and parity in EUR/GBP won’t be seen in a very long time.

The next stop for this currency pair is 0.8350, which was the peak on November 13th.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.