EUR/GBP consolidates BoE-led strong gains, comfortable above 0.90 handle

Haresh Menghani FXStreet

The EUR/GBP cross was seen consolidating previous session's strong gains to 10-month highs and oscillated within a narrow trading band just below mid-0.9000s.

The cross surged through the key 0.90 psychological mark on Thursday following a dovish assessment of the BoE decision. The 6-2 MPC vote distribution, and a slightly more cautious growth projections disappointed market participants hoping for a greater hawkish tilt.

• BoE: No surprises offered - ANZ

Immediately after the announcement, the cross recovered from upbeat UK services PMI-led swing lows near the 0.8925 region and rallied around 125-pips to the highest level since early Nov. 2016. With the post-BoE volatility settles, a modest GBP/USD recovery move on Friday kept a lid on any further up-move for the cross.

Meanwhile, the solid incoming Euro-zone macro data, fueling expectations of a possible ECB tapering at the September meeting, remains supportive of the prevailing bullish sentiment surrounding the shared currency and might limit any immediate sharp corrective fall.

• ECB: Reduction in asset purchases likely to be announced in September meeting - BBH

Looking at the broader picture, the cross has finally broken out of its two-week old trading range and in absence of any major market moving economic releases on Friday, remains poised to extend the near-term upward trajectory.

Technical levels to watch

A strong follow through buying interest beyond mid-0.9000s has the potential to continue boosting the cross further towards the 0.9100 handle en-route 0.9140 level (Oct. 11, 2016 high). On the flip side, any pull-back now seems to find immediate support near the 0.90 handle, below which the cross could correct back towards trading range break-out near the 0.8980-75 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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