Market news
28.10.2022, 01:35

EUR/GBP resurfaces from 0.8600 ahead of German GDP

  • EUR/GBP has seen fresh demand around 0.8600 as the impact of less-hawkish ECB policy guidance eases.
  • UK PM Rishi Sunak is exploring tax rise and spending cuts of up to GBP 50 billion.
  • Investors will shift their focus toward the BOE policy decision scheduled for next week.

The EUR/GBP pair has witnessed fresh demand from 0.8610 in the Tokyo session. The asset delivered a north-side break of the consolidation formed in a narrow range of 0.8610-0.8620 ahead of the German Gross Domestic Product (GDP) data.

The risk profile has sensed a recovery as S&P500 futures have trimmed their gains. Also, the US dollar index (DXY) has witnessed a correction to near 110.35.

On Thursday, the shared currency bulls witnessed an extreme sell-off after the announcement of the monetary policy by the European Central Bank (ECB). ECB President Christine Lagarde announced a consecutive 75 basis point (bps) rate hike and pushed the interest rates to 1.5%, the highest since 2009 to combat the historic surge in inflation and ensure a timely return of the same to 2%.

What weakened the euro bulls is the less-hawkish tone on policy guidance. However, analysts at Commerzbank, point out Christine Lagarde sounded dovish at the press conference but they still see that another big rate hike for the December meeting remains on the table.

Going forward, investors will focus on the German Domestic Product (GDP) data. As per the consensus, the annual GDP growth rate for the third quarter will land at 0.8%, lower than the prior release of 1.7%. On a quarterly basis, the GDP data will display a contraction of 0.2%.

On the UK front, novel UK Prime Minister Rishi Sunak has shifted its entire focus on trimming the pile of debt to bring financial stability. Reports from Financial Times claim that Sunak is exploring tax rises and spending cuts of up to GBP 50 billion, which is in line with the agenda of the bank of England (BOE). Next week, investors will shift their entire focus toward the monetary policy of the BOE. The impact of the monetary policy decision will be extremely higher as it will be the first interest rate decision post-Sunak’s appointment as UK PM.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Feedback
Live Chat E-mail
Up
Choose your language / location
Click Subscribe to receive notifications about promotions and bonuses