EUR/GBP jumps above 0.89 as BoE policy statement weighs on sterling
- BoE leaves policy rate unchanged at 0.75% with a unanimous vote as expected.
- Bank revises GDP growth forecast in Q2 to 0% from 0.2%.
- Retail sales in the UK decline by 0.5% in May.
After spending the first half of the day in a relatively tight range near the 0.8880 handle, the EUR/GBP gained traction in the last hour and rose above the 0.89 mark after the Bank of England's (BoE) cautious tone in its policy statement weighed on the British pound. As of writing, the pair was up 0.35% on a daily basis at 0.8908.
As widely expected, the BoE decided to keep its policy rate unchanged at 0.75% following today's meeting. However, the bank in its statement noted that downside risks to growth had increased since the last meeting and explained that intensifying global trade tensions and the perceived likelihood of no-deal Brexit weighed on the sentiment. Furthermore, the bank announced that it cut its growth expectation for the second quarter to 0% on a quarterly basis from 0.2% announced back in May.
Earlier in the day, the UK's Office for National Statistics reported that retail sales in May contracted by 0.5% on a monthly basis to drag the annual growth rate down to 2.3% from 5.1%.
Meanwhile, European Central Bank (ECB) Vice President De Guindos today on the policy outlook said rate cuts were only a possibility for now, but was largely ignored.
Technical levels to consider