EUR/GBP quickly retreats around 25-pips from post-BoE swing highs

   •  Carney’s comments help ease dovish QIR-led selling around GBP.
   •  Modest tightening still needed, says Carney in the post-meeting presser.

The EUR/GBP cross trimmed some of its post-BoE strong gains and quickly retreated around 25-pips from an intraday high level of 0.8808.

Markets interpreted the overall tone of the BoE's May quarterly inflation report as more dovish than anticipated and prompted some aggressive selling around the British Pound. The cross rallied nearly 80-pips as money markets have now priced out a 2018 rate hike.

However, the BoE Governor Mark Carney's comments, at the post-meeting press conference, saying that a modest tightening might still be needed over the forecast period, left doors open for a rate hike in August and helped ease the GBP selling.

With today's key event risk out of the way, investors now look forward to the ECB President Mario Draghi's scheduled speech on Friday for some fresh impetus. 

Technical levels to watch

A follow-through retracement below the 0.8775-70 region is likely to accelerate the slide further towards mid-0.8700s before the cross eventually drops back to test 0.8725 horizontal support.

On the flip side, the 0.8800-0.8810 region now becomes an immediate strong hurdle, which if cleared could lift the cross back towards testing the 0.8840 heavy supply zone.