• EUR/GBP spikes to a fresh multi-month top after the BoE announced its policy decision.
• Hopes that the BoE is nearing the end of the current rate-hiking cycles weigh on the GBP.
• Technical buying above the 0.8900 mark further contributes to the strong intraday rally.

The EUR/GBP cross quickly reverses a mid-European session slide to the 0.8880-0.8875 region and jumps to its highest level since late September after the Bank of England (BoE) announced its decision. The cross is currently placed just below mid-0.8900s, up over 0.60% for the day.

The British Pound weakens across the board in reaction to a dovish assessment of the BoE's policy outlook, which, in turn, provides a strong boost to the EUR/GBP cross. In act, the UK central bank noted that further tightening of monetary policy would be required if there were to be evidence of more persistent pressures. This further fuels speculations that the BoE is nearing the end of the current rate-hiking cycle amid looming recession risks and weighed heavily on the GBP.

The shared currency, on the other hand, continues to draw support from rising bets for additional jumbo rate hikes by the European Central Bank (ECB) in the coming months. The expectations were reaffirmed by the recent hawkish commentary by several ECB officials, suggesting that the path of least resistance for the EUR/GBP cross is to the upside. Apart from this, the strong intraday rally could further be attributed to some technical buying on a sustained strength above the 0.8900 mark.

Investors now look to the BoE Governor's comments at the post-meeting press conference for fresh cues about the future rate-hike path. The key focus, however, will remain on the ECB monetary policy decision amid signs of easing inflationary pressures in the Eurozone. Nevertheless, the fundamental backdrop remains tilted in favour of bulls and supports prospects for further gains. Hence, a subsequent move, towards reclaiming the 0.9000 psychological mark, looks like a distinct possibility.

Technical levels to watch