EUR/GBP drops below 0.8600 after a hawkish BoE statement

• The Euro pares gains as the BoE boosts the GBP
• The Bank of England stands pat and keeps the door open for further tightening.
• The ECB will release its decision later today.

The Euro reversed on the back of Pound’s strength as the Bank of England released a hawkishly-tilted monetary policy statement after leaving interest rates unchanged, as widely expected.

Three BoE policymakers vore for a rate hike

The BoE voted to keep the Bank Rate at the current 5.25%, with three policymakers in favour of a 25 bps rate hike, an unchanged vote split from the previous meeting.

The three hawkish voters have endorsed the bank's vow for further tightening if inflationary pressures remain persistent. This has curbed hopes of rate cuts in early 2024 and has provided further support for the Pound.

EUR/GBP Technical analysis

The technical picture shows the pair losing upside momentum, with price action returning below the 0.8600 level. If the ECB increases downside pressure on the Euro later today, we could see the pair extending losses to 0.8580 on its way to 0.8550.

On the upside, above 0.8600, the next resistance levels lie at the November 6 swing low, at 0.8650 and 0.8690.
 

Technical levels to watch