Euro remains almost stable against British Pound after strong UK GDP data

The Euro (EUR) remains steady at around 0.8350 against the British Pound (GDP) in the European trade on Thursday, as the latter trades almost stable after the release of the United Kingdom (UK) Q3 and September Gross Domestic Product (GDP) data.

The Office for National Statistics (ONS) has reported that the economic growth remained stronger at 0.7%, as expected, against 0.5% seen in the second quarter this year. On an annualized basis, the growth rate was also in line with estimates at 1.9%, faster than the previous reading of 1.4%.

Month-on-Month (MoM) GDP growth in September was at 0.2%, while it was expected to remain flat again. The August GDP data was revised lower from 0.1%.

Signs of strong UK economic growth are expected to provide relief to Bank of England (BoE) policymakers at a time when the central bank has entered a fresh monetary tightening cycle to tame accelerating price pressures.

Going forward, the major trigger for the British Pound will be the UK labor market data for three months ending September and the Consumer Price Index (CPI) data for October, which will be released next week. Both economic indicators are expected to have a significant impact on expectations of BoE’s monetary policy outlook.

On the Euro front, talks about the succession of European Central Bank's (ECB) leadership heats up. Rabobank’s RaboResearch team highlights that Dutch ECB Governing Council member Klaas Knot, widely seen as a leading candidate to replace ECB President Christine Lagarde, used a Financial Times interview to underscore the central bank’s readiness to respond to future shocks. Knot stated that “If circumstances require it, we will not hesitate to take action,” a remark Rabobank stresses was not about deploying “50bps rate hikes due to geopolitically driven inflation” but rather about moving in the opposite direction. Specifically, Knot suggested that if Europe were to face a future crisis “of a different nature,” he “would not rule out developing another, more tailored instrument.”

Rabobank notes that, with potential crises increasingly likely to stem from “the absence of black, sticky, liquid products rather than digital financial liquidity,” Knot’s comments carry a tacit implication that the ECB’s famous “Whatever it takes” might need to evolve into “Wherever it takes us.”