EUR/GBP stalls post-BoE upsurge at 0.8900 handle

• Post-BoE GBP selling remains unabated.
• Bulls take a breather during Carney’s post-meeting presser.

The post-BoE GBP selling remained unabated and pushed the EUR/GBP cross to fresh one-week high in the past hour, albeit has retreated few pips thereafter.

Despite the historic BoE decision to hike rates for the first time since the financial crisis, a surprising cautious tone in the accompanying quarterly inflation report cast doubts over further rate hikes and weighed heavily on the British Pound.

• The Bank of England hikes Bank rate by 0.25% with 7 MPC members backing the move

Following a sharp short-covering rally of nearly 125-pips, bulls seemed taking a breather during BoE Governor Mark Carney's opening remarks at the post-meeting presser.

Meanwhile, some positive comments that the rate of growth is slower, but not subdued, and that that inflation is unlikely to return to target without some increase in interest rates provided some respite for the GBP bulls, with the cross retreating around 30-pips from session tops.

•  Carney Speech: Inflation is unlikely to return to target without some increase in interest rates
•  Carney Speech: BOE would reassess economic outlook if there is clarity on Brexit
•  Carney Speech: Rate of growth is slower but not subdued
•  Carney Speech: Consequences of resolution on Brexit are not automatic for inflation

Technical levels to watch

A follow-through buying interest beyond the 0.8900 handle has the potential to continue lifting the cross towards 0.8955 horizontal resistance en-route the key 0.90 psychological mark.

On the flip side, 0.8850 level now seems to act as immediate support, which if broken could drag the cross back towards the 0.8800 handle ahead of the 0.8775-70 strong horizontal support.

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