Stronger UK growth revives downside risks for EUR/GBP – ING

FXStreet Insights Team FXStreet

Better-than-expected UK GDP and industrial production data have lifted confidence in sterling, exposing key support in EUR/GBP to a potential downside break, ING's FX analyst Chris Turner notes.

EUR/GBP vulnerable as markets reassess BoE rate-cut timing

"The UK delivered a positive set of data this morning, including a higher-than-expected monthly GDP figure for November and stronger than expected industrial production figures. A little earlier, we also had some positive news on the housing market, where estate agents are becoming a little more optimistic about sales."

"This is all happening at a time when asset managers are still running some reasonably large underweight positions in sterling. We think the sterling correction we have seen since November probably has a little further to run, especially with the risk of an upside surprise in December UK CPI released next week."

"Given the positioning, we think EUR/GBP support at 0.8645/55 looks vulnerable and the risks are building towards a breakdown to 0.8600 next week. Down there should be a good opportunity to hedge against sterling weakness in March, when we expect the Bank of England to deliver its next cut. For reference, money markets currently price the next cut in April and then again by December. We are looking at March and June for cuts."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD stays weak below 1.1650 ahead of US data

EUR/USD remains in the red for the third consecutive session, trading below 1.1650 in the European session on Thursday. The pair loses ground as the US Dollar stays firm following a stronger-than-expected US PPI and Retail Sales data, which reinforced bets for the Fed to keep rates on hold in this quarter. Mid-tier US economic data is next of note for the major.

GBP/USD holds above 1.3400, focus shifts to US data

GBP/USD holds above 1.3400 in European trading on Thursday after testing the 1.3450 neighborhood. The pair jumped on the upbeat UK growth and industrial data but failed to hold the uptick amid a broadly firmer US Dollar. The focus now turns to the mid-tier US data releases for further directives.

Gold remains near $4,600 due to Fed rate pause bets, easing tensions

Gold loses ground after hitting a fresh record high of $4,643 in the previous session, trading around $4,600. The non-interest-bearing Gold lost ground as a stronger-than-expected United States Producer Price Index and Retail Sales, along with last week’s easing Unemployment Rate, reinforced the case for the US Federal Reserve to keep interest rates on hold for the coming months.