EURGBP picks up bids towards 0.8750 amid mixed UK Q3 GDP
|- EURGBP remains mildly bid while showing no major reaction to the UK, German data.
- UK’s Q3 GDP eased to -0.2% QoQ versus -0.5% expected and 0.2% prior.
- Germany’s HICP inflation gauge confirmed 11.6% YoY figures for October.
- The market’s cautious optimism underpins bullish bias, off in the US, and Canada restricts immediate advances.
EURGBP holds onto smaller gains around 0.8730, picking up bids of late, even as the UK’s third quarter (Q3) Gross Domestic Product (GDP) printed mixed data heading into Friday’s London open.
That said, the preliminary prints of the UK’s Q3 GDP signaled that the British economy contracted by 0.20% QoQ versus -0.50% market consensus and the previous expansion of the 0.20% QoQ figure. It should be noted that the monthly GDP came in downbeat to -0.6% MoM for September and other scheduled data from the UK also were mixed, which in turn should have restricted the market's reaction.
Also read: UK Manufacturing Production arrives at 0% MoM in September vs. -0.4% expected
On the other hand, the final prints of Germany’s inflation data for October, as per the Harmonized Index of Consumer Prices (HICP) measure confirmed the 11.6% initial readings.
With this, the market’s cautious optimism and the Euro’s (EUR) benefit from the US Dollar’s (USD) south-run, mainly after the previous day’s US inflation data, keeps the EURGBP buyers hopeful.
It’s worth noting that the US Consumer Price Index (CPI) dropped to the lowest levels in the eight months the previous day and bolstered the hopes of an easy Fed rate hike. The same contrast with the hawkish comments from the European Central Bank (ECB) representatives and enable the EUR to remain firmer.
However, a bank holiday in the US and Canada restricts the market’s latest moves. On the same line are mixed concerns surrounding the US-China tussle over Taiwan and the Covid conditions in China.
Amid these plays, the US S&P 500 futures stay on their way to refreshing the two-month high while the US Treasury yields remain pressured, mostly inactive.
Moving on, EURGBP traders should pay attention to the updates from the UK government and the Bank of England (BOE) concerning the reaction to the UK Q3 GDP, for fresh impulse.
Technical analysis
A daily closing below the 21-DMA immediate support, around 0.8690 by the press time, appears necessary for the EURGBP bears to retake control. Until then, the bulls are all set to challenge the monthly resistance line, around 0.8825 by the press time.
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