- EUR/GBP rose for the second day in a row and hit its highest since mid-November.
- The downward revision of UK GDP weakened the pound and supported the EUR/GBP pair.
- ECB’s more hawkish stance supports prospects for further appreciation.
Crossing EUR/GBP building on the previous day’s strong run higher and advancing to the 0.8800 neighborhood, hitting its highest since mid-November at 0.8972 during the early hours of the European session on Thursday.
Sterling continued its relatively underwhelming performance following a dovish result from last week’s Bank of England meeting, which, in turn, acted as a tailwind for EUR/GBP. In fact, two of the nine members of the Bank of England’s Monetary Policy Committee voted to keep interest rates unchanged, suggesting that the central bank is closer to ending its current cycle of tightening monetary policy.
On the flip side, the downward revision of UK GDP for the third quarter further weakened sterling and pushed the EUR/GBP pair higher for the second day in a row. That The UK economy contracted 0.3% in the July-September period, below the previous estimate of 0.2%. In addition, the annual growth rate was revised down to 1.9% from the reported forecast of 2.4%.
The shared currency, on the other hand, continues to find support from a more aggressive stance being taken by the European Central Bank (ECB), indicating that it will have to raise borrowing costs even more to control inflation. This, in turn, indicates that the path is lower durability for EUR/GBP is bullish and supports prospects for further appreciation.
EUR/GBP Technical Level
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