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EUR/GBP recovered the day’s losses and was trading around 0.8430 in early European trading on Friday. However, the EUR/GBP cross is facing challenges following the European Central Bank (ECB) interest rate decision on Thursday.
The European Central Bank cut the interest rate on its main refinancing operations to 3.65%, a rate cut of 60 basis points, exceeding market expectations of 25 basis points. In addition, ECB policymaker and Bundesbank President Joachim Nagel mentioned in an interview with Deutsche Welle earlier on Friday that “core inflation is also moving in the right direction.” develop. ”
“We are not committed to any predetermined path for interest rates,” ECB Governing Council member Bostjan Vasle said on Friday. Vasle also mentioned that inflation will be driven mainly by core inflation and services. At the same time, ECB policymaker Olli Rehn stressed that future policy decisions will continue to be based on assessments of the inflation outlook, and that the current uncertainty highlights the importance of relying on new economic data.
Traders expect the Bank of England (BOE) to cut interest rates further, especially after data this week showed UK wage growth slowed and GDP was flat for a second consecutive month in July. These economic signals have strengthened expectations that the Bank of England will take more easing measures.
Eurozone industrial production in July is expected to have fallen 0.3% on a monthly basis, released on Friday, after falling 0.1% previously. Meanwhile, industrial production is expected to decline at an annual rate of 2.7%, an improvement from the previous decline of 3.9%. The UK side will focus on consumer inflation expectations.
