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Euro gains on hawkish ECB tone as sterling digests mixed UK data

EUR/GBP was around 0.8485, up 0.24% at the time of writing, with UK data doing little to change expectations for a BoE rate hike by November.

Reported · Written up by our desk · Major Pairs

EUR/GBP edged higher on Thursday, trading near 0.8485, as investors weighed a mixed UK data set against a more hawkish tone from European Central Bank officials. The cross was up 0.24% at the time of writing, according to FXStreet.

In the UK, GDP rose 0.1% month on month in May, after a 0.1% contraction in April. Industrial Production fell 0.5% month on month, missing forecasts, while Manufacturing Production increased 0.1%. FXStreet said the data had limited impact on the British pound as traders stayed focused on the policy outlook.

Money markets continue to fully price a Bank of England rate hike by the November meeting, with concerns that higher energy prices could lift inflation supporting expectations for a prolonged restrictive stance. On the euro side, the shared currency remained supported by ECB policymakers, including remarks from ECB President Christine Lagarde that decisions are data-dependent and statements from Martin Kocher and Joachim Nagel saying the ECB is ready to act to preserve price stability.

FXStreet also noted that Societe Generale views the recent decline in EUR/GBP as potentially overstretched, while technical caution was outweighed by fundamentals supporting a resilient euro versus a pound that lacked fresh bullish catalysts after the latest UK releases.

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