EUR/GBP dips to 0.8750 session lows following BoE’s decsion

EUR/GBP extends its reversal from levels close to 0.8800 to session lows near 0.8750.
The BoE cut its Bank Rate to 3.75% with four policymakers voting against it.
The ECB is widely expected to keep its benchmark interest rate unchanged at 2%

Guillermo Alcala FXStreet

The Euro accelerated its decline from levels near 0.8800 against the Pound Sterling, to reach intra-day lows near 0.8750 at the time of writing, with the weekly low of 0.8745 at a short distance.

The Bank of England met the market’s expectations and cut its Bank Rate by 25 basis points to 3.75% on Thursday, amid a widely split monetary policy committee, with four policymakers calling for keeping rates on hold, and Governor Andrew Bailey tipping the scales towards the dovish side.

The minutes of the meeting observe that inflation has receded since the previous meeting and state that the committee expects consumer inflation to retreat further towards the 2% rate. The extent of further monetary easing, according to the minutes, will depend on the evolution of the outlook for inflation.

Later on, the European Central Bank is widely expected to leave its benchmark interest rate steady, at the current 2% level. Investors will be looking at the bank’s growth forecast for hints about the chances of a rate hike in 2026.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

Economic Indicator

BoE MPC Vote Rate Unchanged

Interest rates are set by the Bank of England’s (BoE) Monetary Policy Committee (MPC). The MPC sets an interest rate it judges will enable the BoE’s inflation target to be met. It is comprised of nine members – the Governor, the three Deputy Governors, the Bank's Chief Economist and four external members appointed directly by the Chancellor. Investors look at each member’s vote in order to seek cues over how unanimous was the decision on interest rates.

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