EUR/GBP recovers to 0.8550 even as ECB vs. BoE battle appears dicey ahead of Eurozone, UK statistics

EUR/GBP recovers to 0.8550 even as ECB vs. BoE battle appears dicey ahead of Eurozone, UK statistics

Time Stamp: September 5, 2023 3:19 AM
Source Node: 2253649

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  • EUR/GBP picks up bids to reverse week-start losses.
  • ECB policymakers flash mixed signals but push back rates cuts and help Euro to stay firmer.
  • Mixed UK spending data, fears about British recession keeps pair buyers hopeful.
  • Eurozone PPI, ECB’s Lagarde and UK PMIs will be important for fresh impulse.

EUR/GBP remains on the front foot around 0.8550 as it reverses the week-start losses heading amid the early hours of the European session on Tuesday. In doing so, the cross-currency pair struggles to justify the European Central Bank (ECB) statements amid mixed signals from the UK spending clues. Also likely to challenge the pair traders is the cautious mood ahead of the key data from the Eurozone and the UK, not to forget ECB President Christine Lagarde’s speech.

The Irish Business Publication, The Currency, recently shared details of the August 31 interview with ECB Chief Economist Phillip Lane where the policymaker praised softening in the August inflation data but cited the need for sustained easing in inflation to defend the policy doves.

That said, ECB President Christine Lagarde highlighted the need for central banks to keep the inflation expectations firmly anchored on Monday. On the same line was the President of the Deutsche Bundesbank and the ECB Council Member Joachim Nagel who advocated for price stability while hesitating from further details.

Elsewhere, Reuters came out with the Barclay Card data while saying, “Annual growth in the UK consumer spending on credit and debit cards slowed to 2.8% in August from 4.0% in July.” However, the UK’s BRC Like-for-Like Retail Sales grew 4.3% YoY for August versus 1.8% prior.

While the British spending details are mixed, a suggestion from the UK Think Tank to infuse more liquidity into the UK capital markets with pensions seems to lure the Bank of England (BoE) hawks, due to the likely lift to the inflation, which in turn lures the EUR/GBP bears.

However, a confirmation from the Eurozone Producer Price Index (PPI) for July, US Factory Orders for the said month and a speech from ECB’s Lagarde become necessary for clear directions. Above all, Thursday’s Bank of England (BoE) Monetary Policy Report Hearings will be crucial for traders to watch to watch as the hawkish bias about the UK central bank recedes of late.

Technical analysis

A two-month-old bullish triangle formation, currently between 0.8510 and 0.8630, keeps the EUR/USD pair buyers hopeful.

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