EUR/GBP rebounds sharply from two-months lows, back above 0.8950

EUR/GBP rebounds sharply from two-months lows, back above 0.8950

Euro reverses dramatically across the board, erases ECB losses. 
EUR/GBP climbs more than 70 pips from the bottom. 

The EUR/GBP pair rebounded sharply on Thursday and turned positive for the day, erasing all the decline that followed the European Central Bank (ECB) decision. 

The central bank cut the deposit rate by 10 basis points to -0.5% and announced a new round of the purchase program starting November 1, for EUR20bn per month, among other measures. The Euro bottomed at the beginning of Draghi’s press conference but then bounced to the upside, gaining more traction during on American hours. 

“While EUR sold off after the ECB announced the easing package, the press conference delivered a reality check. Although the QE is open-ended, the ECB did not discuss changing the limits on asset purchases. Without a change to the limits on purchases, our rates team suggests that the ECB can do QE of EUR 20bn pm for just over a year”, said ING analysts. According to them, the Euro climbed back above as “the open-endedness is not fully set in stone.”

Regarding Brexit, the latest headlines did not have an impact on the Pound. Business Insider reported that leaked documents show the European Union is looking to grant another Brexit extension. EUR/GBP remained near the top after the report, holding into positive territory. 

The pair recently reached 0.8966, close to the European session high (0.8970) and as of writing trades at 0.8955, up 25 pips for the day, about to post the first daily gain in four days. 

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