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Euro rises vs British pound as ECB hawkishness outweighs UK GDP

EUR/GBP traded around 0.8549, after UK GDP growth prints beat expectations but are seen as less likely to shift BoE policy near term.

Reported · Written up by our desk · Major Pairs

EUR/GBP edged higher on Thursday, with the euro getting support from expectations for a hawkish European Central Bank path, even as UK economic data came in stronger than anticipated, FXStreet reported.

At the time of writing, the cross traded around 0.8549 and snapped a three-day losing streak. The UK Office for National Statistics said the economy grew 0.3% in June, versus forecasts for no growth, and expanded 0.4% in the second quarter, slower than the 0.6% pace in the first quarter.

On a year-on-year basis, UK GDP rose 1.2%, above the 1.1% estimate and up from 0.9%. Standard Chartered argued that the Q2 beat versus the Bank of England’s July projection of 0.3% quarter-on-quarter is unlikely to be the main driver for policy, citing more importance for inflation and labour-market data.

Traders are now focused on next week’s UK CPI for fresh clues on the BoE outlook. Meanwhile, expectations are building for another ECB rate hike in September, after a Reuters poll found 57 of 69 economists expect a 25 basis point increase to a 2.50% deposit rate.

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