• The better mood around the Sterling is weighing on the cross today.
• GBP has managed to revert the post-BoE sell-off on Thursday.
• The BoE cut growth forecasts, highlighted Brexit uncertainty.

The British Pound is extending the recovery following the BoE-led sell-off after the bank’s meeting on Thursday, dragging EUR/GBP to the 0.8730/25 band, where it found some decent support for the time being.

EUR/GBP always focused on Brexit

The European cross is retreating for the third session in a row at the end of the week, giving away around a cent since weekly peaks near 0.8820 recorded on Tuesday.

The Sterling managed to revert the sharp drop following the BoE’s event yesterday, partly after the central bank met markets’ expectations of a dovish message and partly in response to rising hopes of a positive outcome from PM May’s negotiations. In this regard, PM T.May is expected to meet her Irish peer T.Varadkar this evening in the Emerald Isle.

Regarding the BoE event, it is worth recalling that the bank left rates and QE unchanged, in line with prior surveys. At its Inflation Report, the BoE revised lower its forecasts for economic growth and inflation on the back of increasing Brexit uncertainty.

EUR/GBP key levels

The cross is now losing 0.08% at 0.8746 and a break below 0.8728 (low Feb.7) would open the door to 0.8655 (monthly low Nov.13 2018) and then 0.8617 (2019 low Jan.25). On the upside, the next resistance emerges at 0.8773 (21-day SMA) followed by 0.8821 (high Feb.5) and finally 0.8861 (200-day SMA).