The EUR/GBP currency pair settled below recent high of 0.8721, its strongest level since January 22nd, in the wake of the European Central Bank’s and the Bank of England’s policy decisions.
The European Central Bank kept its main refinancing operations rate intact at 2.15% at its February 5th policy meeting, in line with market consensus.
And, the ECB deposit facility rate was kept at 2.00%.
ECB President Christine Lagarde reiterated that monetary policy was in a “good place” and played down concerns that a stronger Euro could pose a risk to the inflation outlook.
Lagarde’s remarks suggested that interest rates were likely to remain steady for the foreseeable future.
The ECB President also warned that inflation figures could move unevenly in the coming months, but emphasized that policy decisions should not be driven by any single release of data.
Meanwhile, the Bank of England left its benchmark interest rate intact at 3.75% at its February 5th meeting, in line with market consensus.
Yet, it was a narrow 5 to 4 vote, as officials weighed easing inflation pressures against risks stemming from a weakening economy.
Four members voted in favor of a 25 basis point cut, which highlighted growing divisions within the Monetary Policy Committee.
BoE policy makers said that risks of persistent inflation had decreased, while weaker demand and a softening labor market posed downside risks.
The MPC indicated that further rate cuts were likely, but they would depend on incoming inflation figures.
BoE Governor Andrew Bailey expressed confidence that inflation would reach the 2% target sooner than previously thought. This stance underscored a more dovish tilt at the BoE relative to prior expectations.
The minor Forex pair gained 0.24% for the week.
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