- EUR/GBP stalled even as the dovish mood surrounding the ECB faded following strong eurozone GDP data.
- Traders are awaiting Thursday's Eurozone Harmonized Consumer Price Index (HICP) data.
- The UK budget includes a £40bn tax increase aimed at reducing the budget deficit and increasing funding for public services.
EUR/GBP fell slightly at around 0.8360 in early European time on Thursday, following strong gains in the previous session. Any downside could be limited as the euro could receive support from investors who back off on expectations of a big interest rate cut by the European Central Bank (ECB) in December.
This change in sentiment regarding the ECB's policy outlook followed better-than-expected economic data from the eurozone and Germany released on Wednesday. Investors will focus on the Eurozone Harmonized Consumer Price Index (HICP) on Thursday.
The Eurozone's seasonally adjusted gross domestic product (GDP) rose 0.4% from the previous quarter in the third quarter, beating expectations for a 0.2% rise, according to preliminary estimates from Eurostat. Eurozone GDP grew by 0.9% year-on-year, beating expectations for an increase of 0.8%.
In Germany, GDP rose 0.2% quarter-on-quarter in the third quarter, rebounding from a 0.3% decline in the second quarter and beating the 0.1% contraction expected based on preliminary data. Additionally, Germany's annual consumer price index (CPI) inflation rate in October was 2.0%, the highest level in three months, up from 1.6% in September and faster than expected of 1.8%, according to preliminary figures. .
The euro/pound cross also gained support after the British pound (GBP) fell following the UK Labor government's first budget announcement on Wednesday. The budget includes a £40bn tax increase aimed at reducing fiscal inequality and strengthening public services, CNBC reported. The main source of funding for the budget is an increase in National Insurance (NI) contributions, which are taxes on income paid by employers.
Additionally, traders will likely hear Bank of England (BoE) Deputy Governor Sarah Breeden deliver a keynote speech on “Opportunities and Challenges of Emerging Technologies in the Financial Ecosystem” at a conference hosted by the Hong Kong Monetary Authority and the Bank for International Settlements. We are paying attention to this fact. ”
