EUR/GBP looks to approach 0.8650 after snapping the losing streak

EUR/GBP halts the losing streak that began on October 3, trading in the green zone around 0.8630 during the European session on Thursday. The pair receives upward support despite the downbeat economic data from the United Kingdom (UK).

Industrial Production (MoM) declined 0.7% in August, exceeding the expectation of 0.2% decline. The previous reading was negative by 1.1%. Manufacturing Production month-over-month fell by 0.8% compared to the market consensus of a 0.4% decline and a 1.2% decline in July.

Bank of England (BoE) policymakers are bracing for challenges as a dip in demand and a general decrease in output loom on the horizon ahead of the November interest rate decision.

Katherine Mann of the BoE remains a staunch proponent of tightening policies to swiftly curb inflation and bring it in line with the 2% target. Conversely, Swati Dhingra, another figure at the central bank, favors the notion of a rate cut should the growth rate unexpectedly dip below expectations.

On the flip side, speculations abound that the EUR/GBP pair might encounter additional hurdles, given the prevailing notion that the European Central Bank (ECB) is currently sidelining the possibility of further rate hikes.

Yannis Stournaras, a European Central Bank (ECB) policymaker, emphasized the importance of not prematurely halting the bond-buying initiative within the European Central Bank's emergency program.

ECB Yannis highlighted that there is little benefit in accelerating the conclusion of the Pandemic Emergency Purchase Programme (PEPP), especially given the fresh uncertainties arising from events in Israel and Palestine. The policymaker stressed the need to maintain flexibility and be prepared to act if deemed necessary.

The EUR/GBP pair is experiencing downward pressure as Francois Villeroy de Galhau, a member of the ECB Governing Council and President of the Bank of France, views monetary policy as adequately restrictive.

Villeroy cautioned against additional policy tightening, emphasizing that it is not the appropriate course of action, particularly in the current context of heightened Middle East tensions contributing to a positive outlook for oil prices.

Market participants will likely watch the ECB Monetary Policy Meeting Accounts on Thursday, seeking an overview of economic and monetary developments. Additionally, ECB's President Christine Lagarde's speech will be eyed on Friday.