EUR/GBP remains stable around 0.8690 during the Asian session on Thursday, after posting modest losses in the previous session. Market participants are staying cautious ahead of the release of the United Kingdom’s (UK) Gross Domestic Product (GDP) and Industrial Production figures for August. Meanwhile, investors also await the seasonally adjusted Eurozone Trade Balance data due later in the day.
UK GDP is projected to rise by 0.1% month-on-month (MoM) in August, following a flat reading in July. Industrial Production is also expected to show a 0.2% monthly increase, rebounding from a 0.9% decline in July. On a yearly basis, output could expand 0.6%, up from 0.1% previously.
Downside pressure on the EUR/GBP pair might stay limited as the Pound Sterling (GBP) could come under renewed selling interest. Dovish sentiment toward the Bank of England (BoE) has intensified after the latest UK labor market report for the three months ending August. According to Reuters, money markets are now pricing in around 46 basis points (bps) of rate cuts from the BoE over its remaining two policy meetings this year.
On the other hand, the Euro (EUR) may find some support from cautious remarks by European Central Bank (ECB) policymaker and Slovenia’s central bank acting Governor Primoz Dolenc, who stated that the central bank should keep interest rates unchanged unless unexpected shocks emerge. He added that inflation risks are currently balanced, and the existing policy stance neither fuels inflation nor hinders growth.
Further stability for the Euro could come from rising optimism that French Prime Minister Sébastien Lecornu will survive the upcoming no-confidence vote, following the suspension of the contentious pension reform until after the 2027 presidential elections.
