EUR/GBP clings to gains above 0.90 post-BoE

• The Bank of England leaves policy rate unchanged as expected.
• The Bank reiterates the policy action could be in either direction depending on Brexit.
• Retail sales in the UK rebound in November.

The EUR/GBP pair's reaction to the BoE's rate decision and the policy statement was relatively muted in the last hour to allow the pair to continue to trade in the upper-half of its daily range. As of writing, the pair was up 0.2% on the day at 0.90.40.

As expected, the Bank of England decided to keep the policy rate unchanged with a unanimous vote. Moreover, the bank left the asset purchase facility unchanged at £435 billion. In its policy statement, the Bank noted that Brexit uncertainties had intensified since the last meeting and the volatility surrounding the sterling had risen substantially. "The appropriate path of monetary policy will depend on the balance of the effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction," the Bank reiterated.

Earlier in the day, the data released by the UK's Office for National Statistics showed that retail sales rose 1.4% on a monthly basis in November following October's 0.4% decline and surpassed the analysts' estimate for a growth of 0.3%. 

Despite the upbeat sales data, however, the British pound struggled to find demand as the heavy selling pressure surrounding the dollar allowed investors to pick the euro as a better alternative than the GBP.

Technical levels to consider

The initial resistance for the pair aligns at 0.9050 (daily high) ahead of 0.9090 (Dec. 10 high) and 0.9120 (Sep. 11, 2017, high). On the downside, supports align at 0.9000 (psychological level), 0.8950 (Dec. 13 low) and 0.8880 (100-DMA).