- EUR/GBP hovers below the psychological level at 0.8700.
- The uncertainty over the BoE's further policy actions put pressure on the Pound Sterling.
- ECB is expected to hold further interest rate hikes could weigh on the Euro.
EUR/GBP trades higher around 0.8680 during the Asian session on Thursday. The uncertainty of the next policy action by the Bank of England (BoE), which, in turn, is seen as a key factor acting as a headwind for the EUR/GBP pair.
The most recent UK consumer inflation figures unveiled on Wednesday revealed that the headline CPI held steady at 6.7% in September, defying expectations for a slight dip to 6.6%. This outcome has fuelled speculations for a potential Bank of England (BoE) rate hike in November.
Earlier this week, the UK Office for National Statistics (ONS) reported a slight moderation in wage growth for the three months leading to August. This development may provide the BoE with room to maintain interest rates at their current level.
The relatively subdued earnings data from the United Kingdom might have exerted downward pressure on the Pound Sterling (GBP), contributing to the overall support on the EUR/GBP pair.
Breaking down the earnings figures, the Average Earnings Excluding Bonus (3Mo/Yr) remained unchanged at 7.8% in August, aligning with expectations. However, the Pay levels Including Bonus for the same quarter decelerated to 8.1%, falling short of the market consensus of 8.3%.
On the Euro docket, the speculations suggesting that additional rate hikes by the European Central Bank (ECB) may not be on the horizon could reinforce the negative outlook for the EUR/GBP pair.
The recent data from Eurostat revealed that the Harmonized Index of Consumer Prices (HICP) in the Eurozone stood at 0.3% in September.
In a statement on Wednesday, European Central Bank (ECB) President Christine Lagarde noted that underlying inflation remains robust, and wage growth continues to maintain historically high levels. These factors contribute to the ongoing narrative surrounding the Euro's performance against the British Pound.
Investors will likely focus on Retail Sales from the United Kingdom and the German Producer Price Index (PPI) on Friday, seeking more cues on economic scenarios in both countries.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.