FXstreet.com (Barcelona) - The Bank of England has approved on Thursday a 50 basis points rate cut to 1.0% the lowest interest rate level since the Bank of England started to decide monetary policy and interest rates in 1864.
The British Pound has rallied almost 200 pips against the Dollar in the first half hour after the release reaching as high as 1.4659, the highest level in two weeks, to retrace somewhat to levels around 1.4630. The pound has broken resistance at 1.4579 which has turned into support level, Valeria Bednarik, analyst and foreign manager at MolFX - Management admits a possibility to an attack to the 1.50 level: GBP manages to close day above the 1.4700 zone, medium term perspectives could take it even to 1.50
The EUR/USD has moved south after Trichet's dovish press release and the grim outlook he has forecasted for the Euro Area. EUS/USD has dropped to 1.2871 to 1.27.60 to return afterwards to a level around1.28.
The EUR/GBP has collapsed on selling pressures after the Bank of England released its monetary policy decision, breaking 88.40 support to bounce up at 87.24. Next support level for the Euro remains at 0.8660. According to Kathy Lien, Director of Currency Research at GFT, the BoE's agressive monetary policy is being rewarded by the market: EUR/GBP has increased from 50bp to 100bp in the Euro's favor, the market is less focused on interest rate differentials and more focused on recovery. The pound is trading higher because the Bank of England and the UK are being rewarded for their aggressive monetary and fiscal stimulus. The Euro on the other hand is being punished for implementing sluggish monetary policy.