EUR/GBP crawls above 0.8600 favoured by weak UK data
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- The Euro extends its recovery beyond 0.8600 as UK data disappoints.
- UK GDP and manufacturing production deteriorate beyond expectations.
- These data pose a challenge for the Bank of England.
The euro maintains a positive tone against the Pound on Wednesday’s European trading session, reaching intra-day highs right above 0.8600, following downbeat UK GDP and manufacturing figures.
The sterling dropped against its main peers after National Statistics reported that UK GDP contracted by 0.3% in October. The market consensus had anticipated a softer 0.1% decline, following a 0.2% growth in September.
Beyond that, manufacturing production deteriorated at a 1.1% pace in the same month, against market expectations of a flat reading, with the trade gap widening beyond expectations. These figures cast a shadow over the country’s economic outlook, and add negative pressure on the Pound.
This poses a challenge for the BoE’s hawkish stance and increases the interest in Thursday’s monetary policy meeting. Investors will be especially attentive to the voting results and the bank’s statement for hints of a dovish turn that might send the pound lower.
The technical picture shows the euro building up, with resistance levels at 0.8610 and 0.8650. Supports lie at 0.8550 and the 0.8500 area.
Technical levels to watch
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