The EUR to GBP jumped higher after the Bank of England in an unexpected move, cut the Bank Rate by 50 basis points to 0.25%. The central bank proceed with the rate cut ahead of the next monetary policy meeting in an attempt to offset the coronavirus outbreak impact on the economy. BOE will continue with gilts purchase target at £435 billion with the corporate bond target also left it unchanged at £10 billion. They also announce that they are easing the countercyclical buffer to 0% from 1% previously.
The Monetary Policy Committee voted unanimously to reduce Bank Rate by 50 basis points to 0.25%. The MPC voted unanimously to introduce a new Term Funding scheme adding stimulus for Small and Medium-sized corporations, financed by the issuance of central bank reserves.
The reduction in Bank Rate will support business and consumer confidence at a difficult time, boost the cash flows of households and businesses, reduce the cost, and improve the availability of finance.
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EURGBP Technical Outlook After The Bank Rate Cut
EURGBP is 0.68% higher at 0.8796, while the pair jumped over 70 pips after the annnnouncemeeent by the Bank of England the interest rate cut by 50 basis points. The move today breached the 200-day moving average and bulls are in control. The pair started the rally in February 20, and today managed to hit fresh five-month highs, enhancing the bullish momentum.
On the upside, the first resistance area stands at 0.8846 the daily high. A credible break above might test the next resistance at 0.8867 the high from October 11th,. The next resistance area will be met at 0.9016 the high from October 10th.
On the other side, first support for the EURGBP pair stands at 0.8741 the 200-day moving average and then at 0.8725 the daily low. Next support will be met at 0.8684 the low from yesterday’s trading session.
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