EUR/GBP climbs to 0.8800 neighbourhood, highest since mid-November on weaker UK GDP

The EUR/GBP cross builds on the previous day's strong move up and climbs to the 0.0.8800 neighbourhood, or its highest level since mid-November during the early European session on Thursday.

The British Pound continues with its relative underperformance in the wake of a dovish outcome from the Bank of England meeting last week, which, in turn, acts as a tailwind for the EUR/GBP cross. In fact, two out of nine BoE MPC members voted to keep interest rates unchanged, suggesting that the central bank is closer to ending the current policy tightening cycle.

Apart from this, a downward revision of the UK Q3 GDP print further undermines the Sterling Pound and pushes the EUR/GBP cross higher for the second straight day. The UK economy contracted by 0.3% during the July-September period, weaker than the 0.2% decline estimated previously. Furthermore, the yearly growth rate was revised down to 1.9% from the 2.4% reported initially.

The shared currency, on the other hand, continues to draw support from a more hawkish stance adopted by the European Central Bank (ECB), indicating that it will need to raise borrowing costs significantly further to tame inflation. This, in turn, suggests that the path of least resistance for the EUR/GBP cross it to the upside and supports prospects for a further appreciating move.

Technical levels to watch