EUR/GBP edges higher to near 0.8300 following the disappointing UK data

EUR/GBP appreciates following the release of weaker-than-expected UK data for October.
UK Gross Domestic Product contracted 0.1% MoM in October, against the expected increase of 0.1%.
Germany’s seasonally adjusted Trade Balance reported a surplus of €13.4 billion for October, below the expected €16.1 billion.

Akhtar Faruqui FXStreet

EUR/GBP extends its gains for the second successive session following the release of key economic data from the United Kingdom (UK) and Germany, the largest economy in the European Union (EU) and the world's third-largest exporter. The EUR/GBP cross trades around 0.8280 during the early European hours on Friday.

Data released by the Office for National Statistics reported that the UK Gross Domestic Product (GDP) contracted 0.1% month-over-month in October, against the expected increase of 0.1%. Meanwhile, Industrial Production fell 0.6% MoM following a previous decline of 0.5%, against the expected 0.3% rise. The monthly Manufacturing Production declined 0.6% in October, against the expected 0.2% increase and September’s 1% decline.

The British Pound (GBP) may regain its ground due to the increased likelihood that the Bank of England (BoE) will adopt a slower pace of policy easing compared to other central banks in Europe and North America.

Germany's Federal Statistics Office reported a seasonally adjusted trade surplus of €13.4 billion for October, below the expected €16.1 billion and September's €17.0 billion. During the same period, German exports fell by 2.8%, while imports saw a slight reduction of 0.1%.

On Thursday, the European Central Bank (ECB) decided to reduce its Rate on Deposit Facility by 25 basis points (bps) to 3.0%, as expected. Similarly, the Main Refinancing Operations Rate was reduced by 25 bps to 3.15%. This was the third straight 25 bps interest rate cut by the ECB in a row and the fourth of the year.

The upside of the Euro could be limited as ECB President Christine Lagarde acknowledged that officials discussed reducing interest rates by 50 bps. Lagarde said, "Risks to growth are tilted to the downside" as "Trade friction (with the United States) could weigh on growth."

Economic Indicator

Gross Domestic Product (MoM)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.