EUR/GBP extends post-BOE upsurge beyond 0.90 mark, highest since early Nov.

The post-BOE selling pressure around the British Pound remains unabated, lifting the EUR/GBP cross further beyond the key 0.90 psychological mark to fresh 10-month highs. 

As was widely expected the central bank decided to maintain status quo and leave its benchmark interest rates/asset purchase facility unchanged at 0.25% and £ 435 billion. The fact that the central bank lowered its CPI and GDP estimates, in the latest inflation report seems to have disappointed the markets and weighed heavily on the British Pound. 

   •  BoE lowers GDP forecasts

The fact that MPC forecast for two rate hike over the forecast horizon was largely ignored, clearly indicate a dovish assessment of a shift in the MPC vote distribution, from 5-3 previous to 6-2 today. 

The up-move accelerated after the BOE Governor Mark Carney reaffirmed central bank's readiness to support the economy through Brexit. Carney also added that the drop in GBP has squeezed real income while growth has been dragged lower on weaker consumer spending.

   •  Carney's Speech Live: Monpol cannot prevent weaker real incomes likely to accompany Brexit

Meanwhile, possibilities of some big stops being triggered on a decisive break through the 0.90 handle might have also collaborated towards the pair's sharp upsurge over the past hour or so. 

Technical levels to watch

The ongoing momentum seems strong enough to continue lifting the cross towards mid-0.9000s, which if cleared would pave way for a test of the 0.9100 handle. On the flip side, any meaningful pull-back now seems to find support near the 0.90 handle, below which the cross is likely to find some fresh buying interest near 0.8970-65 strong horizontal zone.