The EURGBP exchange rate is set to see central bank action late on Thursday that could define price action for the full week.
EURGBP – Daily Chart
The price of the EURGBP has jumped from lows near 0.86100 and has two near-term supports in play. Supportive data could help the euro recover, but weakness could lead to another leg lower.
The European economy will release retail sales at 5pm HKT on Thursday. The monthly number is said to drop to -0.2% from 0.2% last year. The big data comes at 7 pm with the release of the latest Bank of England interest rate decision. The BoE also releases its latest monetary policy report.
The Bank of England is expected to keep interest rates on hold at 3.75% as policymakers face a “balancing act” of keeping inflation lower and supporting economic growth. The MPC cut rates before Christmas, from 4% to 3.75%, for the fourth reduction of the year.
Governor Andrew Bailey said at the time that the UK had “passed the recent peak in inflation and it has continued to fall,” but cautioned that it would be a “closer call” for further decisions.
“The Bank reduced rates in December and has clearly indicated it wants to adjust policy gradually, so consecutive cuts are pretty much unthinkable in the current economic environment,” Bailey said.
The European Central Bank will issue its monetary policy statement on Thursday at 8:15 pm HKT, followed by a press conference at 8:45 pm. However, these announcements should be a driver for the euro versus the pound in the week ahead.
