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EUR/GBP takes offers to refresh intraday low, prints three-day downtrend.
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UK GDP improved in January, Industrial Production, Manufacturing Production deteriorated.
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Expectations of Britain’s economic recovery, driven by the latest changes in governing policies, allow the GBP to remain firmer than Brexit.
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BoE versus ECB drama could check pair sellers as the key data begins in London.
EUR/GBP slides 10 pips to refresh intraday low near 0.8860 as the UK’s Office for National Statistics releases the monthly Gross Domestic Product (GDP) on early Friday. It should be noted that the optimism surrounding the British economic transition and mixed sentiment, as well as likely challenges for the Euro, seem to exert additional downside pressure on the cross-currency pair.
UK GDP grew 0.3% MoM in January versus 0.1% expected and -0.5% previous, which in turn pushes back the recession woes and propels the British Pound (GBP) despite mixed readings on the other fronts. That said, UK Industrial Production figures reversed the 0.3% previous expansion with -0.3% MoM marks whereas the Manufacturing Production growth dropped to -0.4% compared to -0.1% market forecasts and 0.0% prior.
Also read: UK Manufacturing Production declines 0.4% MoM in January vs. -0.1% expected
Elsewhere, hopes of an economic recovery and more stock market listings appeared to only help the pair during a lighter calendar week. “The country’s economy is on track to shrink less than expected this year, with two-quarters of negative growth marking a technical recession,” the British Chamber of Commerce (BCC) forecast per Reuters on Wednesday. Also, Britain’s finance ministry said on Wednesday it would launch a review into how investor research into companies could be improved to attract more listings, a move that follows UK chip designer Arm Ltd’s decision to list only in New York, Reuters reported. Along the same lines, Britain’s revised financial market rules will be largely consistent with those of the United States and the European Union to reduce barriers to global firms, its financial services minister Andrew Griffiths told Reuters on Thursday.
It should be noted that Bank of England (BoE) policy maker Swati Dhingra warned against interest rate hikes on Wednesday while saying that overtightening poses a more material risk at this point.
On the other hand, fears of more economic pain for the bloc amid geopolitical tensions with Russia and sticky inflation, as well as higher rates, seem to drag the Euro. It should be noted that the risk-off mood underpins the US Dollar’s haven demand and reduces the demand of its major rival, namely the EUR.
Having witnessed the initial market reaction to the UK’s data dump, EUR/GBP pair traders may concentrate on European Central Bank (ECB) President Christine Lagarde for clear directions. Also important to watch will be a slew of top-tier data from the US and Canada that can entertain the momentum traders across the board.
Technical analysis
Failure to overcome the 0.8930 horizontal hurdle joins the EUR/GBP pair’s clear downside break of a one-week-old ascending trend line, around 0.8895 by the press time, to direct bears towards the 100-DMA support of 0.8765.
ADDITIONAL IMPORTANT LEVELS
