- EUR/GBP rebounds further and clinches tops near 0.9150.
- The BoE left its refi rate unchanged, matching investors’ expectations.
- The “Old Lady” opens the door to negative rates.
The selling pressure is now picking up pace around the British pound and is lifting EUR/GBP to the area of daily highs in the mid-0.9100s.
EUR/GBP boosted by dovish BoE
Following three consecutive daily pullbacks, EUR/GBP has now regained some composure helped by the renewed weakness around the sterling.
In fact, the quid is suffering the dovish message from the Bank of England at its event, where it left unchanged both the refi rate and the QE programme at 0.10% and £745 billion, respectively. The vote of the Committee was unanimous on the latter.
However, the central bank hinted at the possibility of implementing negative rates in case of further deterioration of the inflation and growth outlook. Regarding inflation, the BoE sees the CPI below the 1.0% mark until early 2021.
What to look for around GBP
The sterling appears to have regained some poise following the sharp pullback since the start of September. While dollar dynamics are usually seen behind occasional bouts of upside momentum in the quid, the currency faces increasing risks from the domestic scenario, namely the renewed dovish stance from the BoE, downside risks to the economic outlook from the coronavirus pandemic and the omnipresent concerns around Brexit talks and the EU-UK trade negotiations.
EUR/GBP key levels
The cross is advancing 0.38% at 0.9145 and faces the next resistance at 0.9291 (monthly high Sep.11) followed by 0.9324 (2019 high Aug.12) and then 0.9499 (2020 high Mar.19). On the downside, a breach of 0.9083 (weekly low Sep.17) would expose 0.9034 (55-day SMA) and finally 0.8865 (monthly low Sep.3).
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