EUR/GBP Stalls Near 0.8600 Ahead of BoE Announcement with Mixed Sentiments
EUR/GBP is currently facing a struggle to maintain its strength near the 0.8600 level, as it enters Wednesday’s London session. The cross-currency pair appears to be brushing off mixed Eurozone data, while at the same time validating concerns over the UK’s economic outlook, resulting in the largest daily surge in two weeks seen in the previous trading session.
The recent release of the UK’s inflation data, which showed a downturn, has given some support to the Bank of England (BoE) hawks, as they try to combat soaring inflation amidst sluggish economic activities and labor market challenges domestically. Adding to the woes of the British Pound (GBP) is the setback faced by the ruling Tory Party in the recent by-elections, where they lost some key seats, further dampening market sentiment towards the currency.
Meanwhile, on the European front, Germany’s Unemployment Rate for June eased to 5.6%, slightly better than the 5.7% forecast and the previous reading. Additionally, the final figures of Germany’s HCOB Manufacturing PMI for July came in as expected at 38.8. Similarly, the Eurozone’s HCOB Manufacturing data also matched the initial forecasts of 42.7.
Supporting the euro, the European Central Bank (ECB) has been taking a “meeting-by-meeting” approach, and their recent decision to implement a 0.25% rate hike has boosted confidence among EUR/GBP bulls.
However, with the upcoming BoE Monetary Policy Meeting scheduled for release on Thursday, the market sentiment has turned cautious, leading to mixed feelings for the pair’s traders. While the BoE is expected to announce a 0.25% rate hike, there is uncertainty about the central bank’s stance, and if it hints at a pause in the rate increase or adopts a dovish tone, it could fuel further upside for EUR/GBP.
Investors are closely monitoring the “Old Lady” (BoE) as they wait for clues on the future path of monetary policy. Depending on the outcome of the BoE meeting, the EUR/GBP pair may experience increased volatility as traders react to the central bank’s decisions and forward guidance.
In conclusion, EUR/GBP is currently lacking a clear direction as it hovers near the 0.8600 level. The pair is influenced by mixed economic data from both the Eurozone and the UK, and investors are eagerly awaiting the BoE’s announcement, which is likely to shape the short-term trajectory of the currency pair.