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- EUR/GBP hovers around 0.8340, halfway through the weekly trading range.
- Upbeat German Industrial Production data has failed to provide any significant impulse to the Euro.
- The Pound remains supported by market expectations of further BoE interest rate hikes.
The Euro (EUR) wavers without a clear trend against the British Pound (GBP) on Friday, unable to take any significant advantage of the bright German Industrial Production figures released earlier on the day. The EUR/GBP pair trades just above 0,8340, halfway through the 0.8320-0.8360 range of the last few days, as the risk-averse mood keeps bulls in check.
German data released earlier on Friday revealed that Industrial Production growth accelerated to 0.7% in September, beating market expectations of a flat reading and following a 0.1% increase in August. The report pointed to the automotive and pharmaceutical sectors as the best performers, while production in construction and machinery and equipment manufacturing declined.
Later on Friday, Eurostat will release the Eurozone Retail Sales report, which is expected to show a 0.1% decline in September, reverting August’s 0.1% gain. Barring a much better-than-expected reading, the Euro is unlikely to find any support in these figures.
BoE tightening hopes are keeping Pound dips limited
In the UK, the Bank of England (BoE) fulfilled investors’ expectations and hiked interest rates for the first time in more than three years, bringing the Bank Rate to 4%. Beyond that, some policymakers hinted at further monetary tightening ahead, a view that was shared by Governor Andrew Bailey at the ensuing press conference.
The Pound’s reaction to the decision was muted, but so far, it remains steady near 19-month lows against the Euro, supported by the risk-averse market. In this case, the risk is a de-escalation in the Iran war, as lower OIl prices are likely to cast doubt on the BoE’s tightening commitment, undermining Pound strength and, probably, boosting Euro recovery.
