EUR/GBP: consolidating after big rally through key 0.90 level post dovish BoE

Currently, EUR/GBP is trading at 0.9038, up 0.81% on the day, having posted a daily high at 0.9051 and low at 0.8923.

Due to the BoE decision, EUR/GBP shot up busting through the 0.90 handle to the aforementioned highs in a 78 pip rally on the hourly sticks adding a further 30 pips to complete the move. The last time we saw a move like that in the cross was on the 20th July in a 100 pip rally over the same time frames. This is an extension of the May rally from 0.8380. 

Cable got knocked down from the 1.3260's to 1.3113 with offers in the pound across the board after the BoE failed to give the hawkish tone that markets had been expecting while investors try to second guess the MPC member's bias.  “Markets seem to have been split over the potential that Haldane might join McCafferty and Saunders in dissenting on the Bank Rate. Haldane had recently stated that action had to be taken against rising inflation, but this was said in the context of low wage growth and so negative real income, especially in the less affluent areas in which he had been speaking,” explained analysts at Westpac.

BoE: More dovish but still too optimistic on growth - Danske Bank

EUR/GBP levels

The move was somewhat short of making it to the 0.9059 level and the highs from mid-October 2016. However, closes above 0.9000 and a test of the Nov 2016 high (0.9047), the bulls will remain in charge and eye the swing high from June 2011 at 0.90815, October's 2016 high at 0.91442 and the March 2010 high at 0.9150. To the downside, initial support is at 0.8900 and 0.8875. 0.8834 is the near term uptrend and 0.8789 is the near term channel support.