The EURGBP exchange rate has rallied in recent days as the single currency forces short-covering against other global currencies.
EURGBP – Daily Chart
The price of the EURGBP has rallied from the 2024 support at 0.8248 and hit the 0.84 level. This could start a larger rebound in the euro with 0.8450 the next target.
The European economy will have data at 3pm HKT with German factory orders and UK house prices. These may not affect the currency pair too much but analysts see a -2.8% drop in factory orders after a 6.9% gain in the previous month. A more positive figure could boost the euro against the British pound.
There is a stronger set of figures coming for traders staying on later, with 5:30pm HKT bringing a speech from European Central Bank President Christine Lagarde. That will be followed by GDP growth data at 6pm with traders expecting to see a quarterly return of 0.1%.
Lagarde warned Thursday that the eurozone faces “risks all over” after tariffs and massive German spending plans, as policymakers cut rates again but said future monetary easing was in doubt. That has led to a surge in the euro in recent days as traders expect a slower rate cut cycle. Germany’s incoming government will now look to ease debt rules as it seeks to spend huge amounts on defense.
“In view of the threats to our freedom and peace on our continent,” Friedrich Merz said. The motto “whatever it takes” must now apply to the country’s defense, he added.
Merz suggested that defense spending above 1% of gross domestic product be exempted from the restrictions of Germany’s constitutional debt brake, which limits the structural budget deficit to 0.35% of gross domestic product.
