The EURGBP exchange rate has German inflation tomorrow, ahead of the UK’s growth update on Friday.
EURGBP – Weekly Chart
EURGBP found support at the 0.8550 level but needs to see a catalyst for further gains to test the resistance near 0.8700.
The German GDP figures will be released tomorrow, which are expected to come in at 6.2% after last month’s 6.4%.
The bigger release will be the UK GDP on Friday for the three months to the end of June. The forecast for the monthly is a flat zero percent, while the year-on-year forecast is for an 0.5% gain.
Bank of England governor Andrew Bailey raised the UK’s interest rate again but was quiet on the path ahead.
“I’m not going to judge what the path of rates will be. Not least because, as the report indicates, more than one path may deliver inflation back to target sustainably,” he said.
“We had some unpleasant surprises in June, we’ve seen some of that turnaround, which is frankly, you can put into context today, why I don’t think, speaking personally, I don’t think there was a case for a 50 basis point raise today,” he added.
“We hope that we can deliver the path that we’ve set out in the report, because the path we’ve set out in the report does not have a recession in it. We will have to see.”
The EURGBP has found some support at current levels, and the uncertainty over UK rates has held it back. If it becomes clear that the Bank of England has halted its rate hikes, then the exchange rate could advance.
Commerzbank CFO Bettina Orlopp said the ECB is likely finished with its rate increases. “We will stick to the 3.75% we currently have,” she said.
The ECB raised its interest rates in July, completing a full year of increases. ECB President Christine Lagarde said the central bank could continue or pause rate hikes at its next meeting in September but definitely will not cut.
