EUR/GBP spikes to 0.8800 neighborhood on BoE

   •  GBP weakens across the board after BoE opts to maintain status-quo.
   •  BoE says inflation has fallen rapidly and is remain low in the near-term.

The EUR/GBP cross rallied around 60-pips from an intraday low level of 0.8729 and refreshed session tops post-BoE announcement. 

The UK central bank, at its meeting this Thursday, decided to leave key benchmark interest rate unchanged at 0.5% and asset purchase facility at £435 billion. There was no change in the MPC votes on the interest rate decision but the British Pound weakened across the board as the accompanying minutes revealed that policymakers saw value in waiting to see how data evolved over coming months.

This coupled with the central bank's statement, in the accompanying quarterly inflation report (QIR) report that inflation has fallen back more rapidly than expected in Feb. QIR and is now expected to be somewhat lower in the near-term kept exerting some downward pressure on GBP.

The cross jumped back to the 0.8800 neighborhood, reversing majority of its losses posted in the previous two trading session, as investors now look forward to the BoE Governor Mark Carney's post-meeting presser for clues over an imminent rate hike action in August.

Technical levels to watch

A follow-through buying interest beyond the 0.8800 handle has the potential to lift the cross further towards the 0.8840 supply zone. On the flip side, 0.8775-70 area now seems to protect the immediate downside, which if broken might turn the cross vulnerable to head back towards retesting 0.8730 support area.