EUR/GBP recovers intraday losses ahead of BoE policy decision

EUR/GBP revives intraday losses as BoE policy meeting takes center stage.
The BoE is expected to cut interest rates by 25 bps to 4.75%.
The Euro is expected to remain under pressure due to multiple headwinds.

The EUR/GBP reverses intraday losses and bounces back to near 0.8300 in the European trading session on Thursday. The cross rebounded strongly after posting a fresh weekly low near 0.8310 ahead of the Bank of England’s (BoE) interest rate decision, which will be announced at 12:00 GMT.

The BoE is widely anticipated to cut interest rates by 25 basis points (bps) to 4.75%. This will be the second interest rate cut by the BoE this year. The BoE initiated the policy-easing cycle in the August policy meeting in which it cut interest rates by 25 bps to 5%, but it kept them steady in the September meeting.

Out of the nine-member led Monetary Policy Committee (MPC), seven members are expected to vote in favor of a rate reduction, while two are expected to support leaving interest rates unchanged at 5%. BoE external MPC member Catherine Mann, an outspoken hawk, is likely to be one of those who would support keeping rates stable.

Investors will pay close attention to BoE Governor Andrew Bailey’s press conference to get cues about the impact of Republican Donald Trump’s victory in the United States (US) presidential elections and United Kingdom (UK) Labour’s firm Autumn Forecast Statement on the inflation and the interest rate outlook.

Though the Euro (EUR) has shown a strong recovery against the Pound Sterling (GBP) ahead of the BoE policy meeting, its near-term outlook remains vulnerable due to multiple tailwinds such as weak Eurozone economic prospects due to Trump’s victory, the collapse of German three-party coalition and expectations that the European Central Bank (ECB) could fasten its policy-easing cycle.

On the economic data front, month-on-month German Industrial Production data for September has come in worse than expected. The Industrial Production declined by 2.5% after expanding by 2.6% in August. Economists expected the data to have contracted by 1%.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

Next release: Thu Nov 07, 2024 12:00

Frequency: Irregular

Consensus: 4.75%

Previous: 5%

Source: Bank of England

Share: Feed news

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.