EUR/GBP Rebounds to Near 0.8420 Ahead of the Bank of England's Policy Statement

After a substantial sell-off from 0.8450, the EUR/GBP pair has found some bids near 0.8400. The cross attempted many times to sustain above 0.8440 but was unable to do so, dragging the asset lower to the round level support of 0.8400.

Pound bulls are awaiting the Bank of England's (BOE) statement of monetary policy during the London session. Interest rates are scheduled to be increased by 25 basis points by BOE Governor Andrew Bailey (bps). The UK's Consumer Price Index (CPI) reading of 7% represents a slew of inconveniences for households, as rising energy costs and food prices have already lowered households' actual income. Notably, the BOE increased policy rates by 50 basis points at its most recent monetary policy meeting. The BOE is maintaining its usual hawkish approach this time around, believing that a gradual increase would be the best course of action to avoid a significant impact on the economy.

Meanwhile, the euro bulls' position is likely to remain shaky, as the European Union has stated its intention to ban Russian oil within six months. The EU is determined to wean itself from Russian oil following Russia's invasion of Ukraine. It would be interesting to see how the EU will meet its record daily demand of 3.5 million barrels without Russian oil.

Apart from that, the euro's demand has been damaged by the underperformance of Euro Retail Sales announced on Wednesday. Retail Sales came in at 0.8 percent behind market expectations of 1.4 percent and 5.2 percent, respectively. 

EUR/GBP