- EUR/GBP renews intraday low amid sluggish session, stays pressured for the second consecutive day.
- German Industrial Production (IP) growth improves on MoM, eases on YoY for April.
- Fears of British economic woes, political jitters surrounding UK prod pair sellers.
EUR/GBP remains pressured around the intraday low near 0.8600 during the second daily fall amid the early hours of Wednesday’s London open. In doing so, the cross-currency pair takes clues from the downbeat German data while ignoring hawkish comments from the European Central Bank (ECB) officials and pessimism in the UK.
Germany’s Industrial Production (IP) improved to 0.3% MoM versus 0.6% market forecasts and -2.1% prior (revised) whereas the yearly growth figures ease to 1.6% from 2.3% (revised) previous readouts and 1.2% expected.
Also read: German Industrial Production rises 0.3% MoM in April vs. 0.6% expected
On the other hand, ECB Governing Council member Isabelle Schnabel pushes back the recent dovish concerns by stating that the impact of our tighter monetary policy on inflation is expected to peak in 2024.
Also read: ECB’s Schnabel: Impact of our tighter policy on inflation expected to peak in 2024
Previously, the downbeat prints of the German Factory Orders and Eurozone Retail Sales joined easing inflation expectations in the bloc to weigh on the Euro. Further, the cautious mood ahead of the UK Prime Minister Rishi Sunak’s US visit and fears that the British economy will have to bear the burden of too high inflation and less productivity increase weighs on the EUR/GBP prices.
Looking ahead, a light calendar will direct EUR/GBP traders to pay attention to UK PM Sunak’s US visit, as well as local politics, for clear directions. “British Prime Minister Rishi Sunak will advocate for a deepening of economic ties between the United Kingdom and the United States when he speaks to the country's lawmakers and business representatives during his trip to Washington D.C. this week,” Reuters quotes a British Government press release.
To sum up, EUR/GBP bears are likely to keep the reins as the recent Eurozone statistics prod ECB hawks while the higher British inflation keeps suggesting the BoE rate hikes.
Technical analysis
Failure to cross the previous support line stretched from the mid-March, around 0.8635 by the press time, directs EUR/GBP bears towards the yearly low marked in the last week near 0.8565.
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