- EUR/GBP seesaws around intraday top while snapping two-day downtrend.
- Germany’s Industrial Production improved on MoM, eased on YoY.
- Hawkish bets on ECB keep buyers hopeful amid risk-off mood.
- BOE’s Bailey may witness more pressure for rate hikes as Liz Truss becomes UK PM.
EUR/GBP stays defensive above 0.8600 during early Wednesday morning in Europe. In doing so, the cross-currency pair justifies mixed German data amid hawkish expectations from the European Central Bank (ECB).
That said, Germany’s Industrial Production improved to -0.3% MoM in July versus -0.5% expected and 0.8% prior. Further, the YoY details signaled that the Industrial Production growth deteriorates to -1.1% versus 0.5% previous reading.
Elsewhere, the latest Reuters poll for the ECB suggests a 0.75% rate hike versus the broad market consensus, as well as the policymakers’ previous signals that favored 50 basis points (bps) of increase in the benchmark rates during Thursday’s monetary policy meeting.
“Eurozone inflation is close to its peak,” ECB Governing Council member Yannis Stournaras said previously. Following that, ECB policymaker Martins Kazaks said in an interview with Eurofi magazine that the “ECB will hike above a neutral rate if needed.” However, he added that a broad and protracted recession could slow rate hikes. Meanwhile, Governing Council member Mario Centeno said that “the ECB may achieve inflation goal with slow normalization.”
On the other hand, the British Pound (GBP) fails to cheer the chatters surrounding the multi-billion pounds worth of stimulus from incoming Prime Minister Liz Truss.
Earlier in the week, Liz Truss won the PM candidate race, which in turn propelled chatters over her plan to freeze energy prices and help power companies in Britain. “British Prime Minister Liz Truss plans to freeze energy prices for households for 18 months and allow energy companies to take out government-guaranteed loans to make up for the difference between the wholesale and retail prices,” BBC reported on Tuesday. The news also stated that Truss is expected to unveil her plan on Thursday. With this UK PM Truss proposed to freeze roughly £130 billion in household energy bills while mulling another £40 billion for small businesses.
However, fears of the recession took clues from the firmer data and growing uncertainty over the Bank of England’s (BOE) next move as Truss has criticized the British central bank multiple times for its late reaction to the inflation woes.
It should be noted that the recession fears and energy crisis in the bloc, as well as in the UK, contradict the hawkish Fed bets to weigh on the market sentiment ahead of the second-tier EU data and speech from BOE Governor Andrew Bailey.
Technical analysis
A successful upside break of the weekly resistance line, at 0.8610 by the press time, appears necessary for the EUR/GBP bulls to keep the reins. That said, the recent top surrounding 0.8675 and the yearly peak marked in June near 0.8720 will be in focus.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: Slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.