• EUR/GBP gained nearly 100 pips with the initial reaction to BOE policy decisions.
• BOE hiked its policy rate by 25 bps to 1.25% as expected.
• Three BOE policymakers voted for a 50 bps hike. 

EUR/GBP rose sharply and touched a daily high of 0.8630 in the European trading hours on Thursday before retreating slightly. The pair was last seen trading at 0.8620, where it was up 0.55% on a daily basis.

The Bank of England (BOE) announced on Thursday that it hiked its policy rate by 25 basis points to 1.25%. Some experts were expecting the BOE to raise its rate by 50 bps. Three policymakers voted for a 50 bps hike but failed to help the British pound find demand.

In its policy statement, the BOE said that it expects Consumer Price Index (CPI) inflation to be over 9% over the next few months before reaching 11% in October. "BOE will act forcefully in response, if necessary," the publication further read.

Reflecting the negative impact of the BOE's policy announcements on the GBP, the GBP/USD pair is down more than 1% on the day at around 1.2050.

Technical levels to consider