GBP price, news and analysis:
- Thursday’s fall EUR / GBP after the European Central Bank had just thrown an account at its frog, it could be turned back the next week.
- UK economic data released on Friday was mixed, shifting the focus to next week’s UK unemployment and inflation in particular.
EUR / GBP is in a good position after next week’s UK inflation data
EUR/GBP fell back on Thursday after the European Central Bank tightened monetary policy only marginally, and barely reacted at all to Friday ‘s UK economic data, which showed lower – than – expected growth, offset by better – than – expected industrial production.
Economic data for the United Kingdom
Source: DailyFX economic calendar
This means that next Tuesday there will be UK labor market indicators and especially Wednesday’s inflation data for major GBP traders. There is a consensus among economists surveyed by news agencies that the annual inflation rate will rise from 2% to 3%, but due to weak GDP data it can be underestimated and this would help the EUR / GBP to grow, possibly to 0.86 if this level has not yet been reached by Wednesday.
EUR / GBP price chart, two-hour schedule (August 6-September 10, 2021)
Source: IG (click for larger image)
Note that the Governor of the Bank of England, Andrew Bailey, said this week that the BoE’s Monetary Policy Committee was evenly divided in August on whether the basic conditions for rising interest rates were met.. Nevertheless, there are growing signs that the BoE tends to reduce incentives, and this remains true even when inflation is underestimated.
Nevertheless, Thursday’s EUR / GBP decline seems exaggerated and a higher reaction would not be surprising.
– Written by Martin Essex, analyst
Feel free to contact me on Twitter @MartinSEssex