EUR/GBP will target 0.8630 if the ECB raises interest rates

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UK GDP shrank by 0.5% in July, and expectations for the Bank of England meeting fell to about 18 basis points after the data was released.

Expectations for a rate hike at next week’s Bank of England meeting fell to around 18 basis points after UK GDP shrank 0.5% in July, reigniting fears of a recession. After two consecutive days of disappointing data, gilt yields rebounded sharply, narrowing their spreads over German and U.S. Treasury yields.

GBP/USD rebounded after falling to the 200-day moving average at 1.2430.

EUR/GBP is likely to remain choppy today, with investors likely targeting Wednesday’s high of 0.8630 if the ECB raises interest rates.