ALERT: GBP/EUR exchange rate powers to 1.2 as ECB cuts interest rate ref. GBP/EUR

The EUR/USD has plummeted a full percent to hit 1.3368.

WHY - the ECB cuts rates to record-low 0.25%; the euro has plunged across the board.

As we said earlier, something had to be done against an over-priced currency that had put the Eurozone's growth prospects in jeopardy.

We would expect the pound to euro exchange rate to now attempt a drive higher to 1.21 as momentum is sure to slip away from the shared currency in coming sessions.

"The euro was crushed across the board and fell over 150 pips against the yen to hit a low of 131.88, last seen Oct 10. Against expectations, the ECB decided to cut its main interest rate and the lending facility rate by 25 basis points Thursday. All eyes are now on Draghi's press conference starting at 13.30GMT for an explanation of the central bank's surprising decision." - FX Street.com.

Watch the press conference live right here:

Markets were caught wrong-footed

Clearly markets were actually not positioned for today's outcome.

Ipek Ozkardeskaya at Swissquote Research's position is exemplary of this wrong-footed approach:

"Regarding the ECB however, an increasing number of analysts expect the ECB to cut the refinancing rate from 0.50% to the fresh historical low of 0.25% (although this is not the consensus for the November meeting).

"In our view, the probability of a rate cut is low given the delicateness of the Euro-zone’s economic situation.

"Indeed, the mounting downside pressures in Euro-zone inflation is a good reason to expect a rate cut from ECB in order to boost liquidity and CPI. Yet the PMI readings remain sustained at the highest levels of the year despite the record high unemployment across the zone.

"Although we expect ECB to cut rate before the year end, we doubt the efficiency of such policy move. In fact, the ECB rate cut in April from 0.75% to 0.50% had short-term impact on CPI figures.

"We remind that from April to June, CPI advanced from 1.2% to 1.6% then regressed aggressively to hit 0.7% in October. We believe there is no reason for the rate cut to better hit the market this time. As long as the transmission problem and the core/periphery fragmentation issues are not resolved, the liquidity and the CPI are likely to remain under pressure.

"Furthermore, the ECB is guided by the shadow of the old Bundesbank which lives in fear of instability and we suspect that 0.25% is too-low from Germany’s point of view.

"And finally, lower rates mean narrower maneuver margin for ECB in the future and may oblige the central bank to suspend the use of interest rate tool (further move being 0.00% bottom) – which, by itself, is an important restriction. Although we think the probably of a cut at this meeting is low, Draghi is most likely to sound very dovish, stressing weak growth and deflationary fears."