EUR/GBP drops to session lows, around 0.9025 region post-BoE

The British pound picked up some pace post-BoE announcement and pushed the EUR/GBP cross to session lows, around the 0.9025 region.

As was widely expected, the Bank of England left interest rates an all-time low of 0.1% and bond-buying program unchanged at £745 billion. In the accompanying policy statement, the UK central bank offered some glimpses of optimism and provided a modest lift to the British pound.

The BoE said that the economic downturn was less severe than initially thought and also upgraded its current year economic growth projection. The BoE reiterated that the risks to the outlook remain skewed to the downside and showed readiness to adjust policy if required.

The BoE expects inflation to remain subdued but anticipated it to return back to 2% target in two years. There was no specific mention of pursuing negative interest rates moving forward, which seemed to be one of the key factors behind an uptick in the sterling.

On the other hand, the shared currency remained well supported by the prevalent bearish sentiment surrounding the US dollar. This, in turn, might help limit any deeper losses for the EUR/GBP cross, at least for the time being.

Moving ahead, market participants now look forward to the post-meeting press conference, where comments by the BoE Governor Andrew Bailey might infuse some volatility around the GBP crosses.

Technical levels to watch