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EUR/GBP gained traction for the second day in a row and reached its highest level since mid-November.
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A downward revision of the UK GDP print undermines the GBP and extends support to the cross.
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A more dovish stance adopted by the ECB supports the possibility of more complimentary action.
The EUR/GBP cross builds on the previous day’s strong move up and climbs to the 0.0.8800 neighborhood, or its highest level since mid-November during the early European session on Thursday.
The British pound continued its relative under-performance in the wake of a dovish outcome from the Bank of England meeting last week, which, in turn, acted as a tailwind for the EUR/GBP cross. Indeed, two out of nine BoE MPC members voted to keep interest rates unchanged, suggesting the central bank is nearing the end of the current policy tightening cycle.
Apart from this, a downward revision of the UK Q3 GDP print further weakened the Sterling Pound and pushed the EUR/GBP cross higher for a second day. The UK economy contracted by 0.3% in the July-September period, weaker than the 0.2% decline previously estimated. Moreover, the annual growth rate was revised to 1.9% from the initially reported 2.4%.
The shared currency, on the other hand, continues to garner support on further dovishness by the European Central Bank (ECB), indicating that borrowing costs will need to rise more significantly to curb inflation. This, in turn, suggests that the path of least resistance for EUR/GBP crosses it to the upside and supports the possibility of a more bullish move.
Technical levels to watch
EUR/GBP
