EUR/GBP slumps to near 0.8470 as Pound Sterling strengthens after BoE’s policy decision

EUR/GBP falls sharply to near 0.8470 as the BoE retains a gradual rate-cut cycle approach and raises GDP growth forecasts for the year.
The BoE reduces interest rates by 25 bps to 4.25%, with a 7-2 majority.
The EU plans to introduce up to 95 billion Euros worth of countermeasures on US imports.

Sagar Dua FXStreet

The EUR/GBP pair slides to near 0.8470 during early North American hours on Thursday as the Pound Sterling (GBP) attracts significant bids after the Bank of England (BoE) announces its monetary policy. The BoE reduced interest rates by 25 basis points (bps) to 4.25%, as expected, and retained its “gradual and cautious” policy-easing stance.

Market experts had priced in a 25-bps interest rate reduction due to potential economic risks in the face of tariffs announced by United States (US) President Donald Trump in early April, improving domestic inflation, and declining energy costs.

Seven out of nine Monetary Policy Committee (MPC) members voted for lowering interest rates, while two officials, Catherine Mann and Chief Economist Huw Pill, favored leaving interest rates at 4.5%.

Meanwhile, the BoE has raised its Gross Domestic Product (GDP) forecast for the current year to 1% from 0.75% projected in the February meeting. BoE Governor Andrew Bailey has expressed confidence that the disinflation trend is intact and the central bank has forecasted headline Consumer Price Index (CPI) in the one-year time at 2.4%, down from the forecast of 3% made in February.

Going forward, investors will focus on the US-UK trade deal, which is expected to be announced by US President Trump at 14:00 GMT. On Wednesday, Trump declared that he will announce a bilateral trade deal with one nation, which he referred as “high respected country” through a post on Truth.Social. A report from the New York Times showed that the nation will be the UK.

In the Eurozone region, the European Union (EU) Commission has unveiled countermeasures for tariffs announced by the US. European Trade Commissioner Maros Sefcovic stated that the institution plans to introduce countermeasures on up to 95 billion Euros ($107.2 billion) of US imports, if negotiations with Washington were to fail to eliminate tariffs applied by US President Trump, Reuters reported.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.