British Pound holds firm against Euro on stronger growth, hawkish policy signals
EUR/GBP trades on the defensive on Thursday, remaining on the back foot for the fifth consecutive day following last week’s rejection from the 0.8600 psychological mark. At the time of writing, the cross trades around 0.8537, its lowest level since mid-August.
British Pound held steady against the Euro on Thursday, as economic growth figures and hawkish policy signals bolstered its position. The GBP strengthened after the UK's second-quarter GDP was revised upward to 0.5% quarter-over-quarter from 0.4%, with annual growth now projected at 1.4% from 1.2%. BoE policymaker Catherine Mann stated that the current stance was "not sufficiently tight" and called for interest rate hikes to address inflation concerns.
This optimism for the UK economy has given the BoE more room to tighten monetary policy. Meanwhile, the Euro (EUR) remains weakened by political and fiscal issues in France, as well as rising borrowing costs and fiscal uncertainty. The Eurozone's manufacturing data showed a slight improvement, but expectations are that the ECB will take a more measured approach to interest rate adjustments due to ongoing energy price pressures.
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