Euro loses traction against Pound after weak Eurozone Industrial Production

EUR/GBP eases after hitting a fresh year-to-date high of 0.8843 earlier in the European session.
UK GDP contracted 0.1% in September, missing expectations for flat growth.
Focus turns to Friday’s Eurozone releases, including Employment Change, Q3 GDP and updated growth forecasts.

Vishal Chaturvedi FXStreet

The Euro (EUR) is easing slightly against the British Pound (GBP) on Thursday after earlier climbing to a fresh year-to-date high of 0.8843. At the time of writing, EUR/GBP is trading around 0.8826, snapping a two-day winning streak as traders reacted to disappointing Eurozone data.

EUR/GBP initially pushed higher in the early European session after a batch of weak United Kingdom (UK) data pressured the Pound. UK Gross Domestic Product (GDP) for September fell 0.1% MoM, against expectations for flat growth and matching the decline recorded in August.

The quarterly figures also softened, with Q3 GDP rising just 0.1% QoQ, below the 0.2% forecast and down from 0.3%. On a yearly basis, the economy expanded 1.3% in the third quarter, slightly below the 1.4% expected and unchanged from the earlier quarter.

Industrial Production dropped 2.0% in September, far worse than the 0.2% decline expected and reversing a 0.3% increase in August. Manufacturing output also disappointed, falling 1.7% MoM compared with a forecast of a 0.3% decline. The broad-based softness in the data reinforced concerns that UK growth momentum remains fragile heading into the final quarter of the year.

This comes on top of the weak labour market numbers released earlier in the week, which had pushed markets to expect a December rate cut from the Bank of England (BoE). Today’s softer GDP and production data strengthen that outlook and add more pressure on the central bank to act if the slowdown continues.

However, the Euro later lost traction after fresh Eurozone numbers also undershot expectations. Industrial Production for September rose only 0.2% MoM, well below the 0.7% consensus but still an improvement from the -1.1% decline in August. On a yearly basis, Industrial Production increased 1.2 percent, falling short of the 2.1 percent forecast and edging only slightly above the 1.1 percent recorded in the previous month.

Looking ahead, attention shifts to a packed Eurozone calendar on Friday. Traders will watch the release of the preliminary Employment Change figures and the first estimate of third-quarter GDP. The European Commission is also set to unveil its latest economic growth projections.

Economic Indicator

Gross Domestic Product s.a. (QoQ)

The Gross Domestic Product (GDP), released by Eurostat on a quarterly basis, is a measure of the total value of all goods and services produced in the Eurozone during a certain period of time. The GDP and its main aggregates are among the most significant indicators of the state of any economy. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Euro (EUR), while a low reading is seen as bearish.

GBP/USD dips below 1.3350 with bullish momentum losing steam

The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair trades near 1.3340 at the time of writing, down from 1.3387 highs last week, although it maintains a near-term bullish trend intact.

EUR/USD declines toward 1.1400 on broad USD recovery

EUR/USD stays on the back foot on Monday and declines toward 1.1400 in the second half of the day. The pair faces slight selling pressure as the US Dollar gains ground after a negative weekly close. Middle East concerns and the USD/JPY rally support the Greenback.

Gold struggles to build on last week's gains, trades below $4,150

Gold finds it difficult to attract buyers and trades in the red below $4,150 after closing the previous week in positive territory. The US Dollar attracts some safe-haven flows amid tensions over the Strait of Hormuz and undermines the bullion. However, receding US Federal Reserve rate hike bets might hold back USD bulls from placing aggressive bets.

Dogecoin recovery stalls amid early signs of whale support

Dogecoin (DOGE) price nears $0.0770, maintaining a broadly consolidative tone for the last three days after Friday’s 4% rebound. The first-ever meme coin is losing retail interest as DOGE derivatives volume drops, while on-chain data shows early signs that large-wallet investors, commonly referred to as whales, are expanding their holdings.

The US Dollar just beat the Swiss Franc at its own safe-haven game

As the king among safe havens, the Swiss Franc is supposed to benefit from geopolitical shocks such as the Iran war. This time, it didn’t. The Swissie is nearly 6% below January’s peak against the USD after a sharp decline that came along with the war in Iran and the closure of the Strait of Hormuz.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.