EUR/GBP surges past 0.8800 after BoE Bailey’s comments
- The euro breaks above 0.8800 to hit session highs at 0.8855.
- Bailey announces the end of the emergency support program and the pound plunges.
- BoE governor warns about unprecedented volatility in the long end of the gilt market.
The euro has broken higher against the British pound on Tuesday, breaching resistance at the 0.8800 area to hit two-week highs at 0.8855 so far. BoE Governor, Andrew Bailey’s comments regarding the latest monetary policy measures have crushed the pound
The BoE's emergency support program ends on Friday
Bailey has shown its concerns about the “unprecedented volatility in the long end of the gilt market” and urged pension fund managers to finish rebalancing their portfolios by Friday. The Bank of England will end its emergency support program for the country’s fragile bond market.
The Bank expanded the bond-buying scheme last Tuesday in order to include inflation-linked debt, two weeks after having launched it, aiming to confront the turmoil created by Prime Minister Liz Truss with her announcement of tax cuts as a part of a set of unfunded economic reforms.
EUR/GBP might gain bullish traction above 0.8800
From a technical perspective, if the euro confirms above 0.8800, bulls might gain confidence to attack the 0.9000 psychological level ahead of the September, 28 high at 0.9070.
On the downside, below 0.8800, the next support levels might be 0.8740 (October, 7 low) and then probably at 0.8690 (Sept. 22 low).
Technical levels to watch