EUR/GBP remains sideways above 0.8600 as focus shifts to UK factory and GDP data
- EUR/GBP consolidates slightly above 0.8600 ahead of UK factory data.
- UK’s monthly GDP is seen expanding by 0.2% after a contraction in October.
- The ECB is expected to remain hawkish for longer than the BoE.
The EUR/GBP pair trades back-and-forth slightly above 0.8600 in the late London session. The cross struggles for a direction as investors await the United Kingdom factory data for November, which will be published on Friday.
The UK factory data will be keenly watched as it will provide cues about scale of industrial activities. Fears of a technical recession in the UK economy deepened after the Office for National Statistics (ONS) reported a shrinkage by 0.1% in the third quarter of 2023. The chances of further contraction in the UK economy would deepen if the factory report remains subdued.
As per the consensus, UK’s monthly Industrial and Manufacturing Production rose by 0.3%. The annual Industrial Production rose by 0.7% against 0.4% in October. In the same period, the Manufacturing Production grew strongly by 1.7% versus. the former reading of 0.8%. The monthly Gross Domestic Product (GDP) expanded by 0.2% after shrinking 0.3% earlier.
Meanwhile, Bank of England (BoE) policymakers struggle between vulnerable economic outlook and high price pressures. BoE Governor Andrew Bailey reiterate in his testimony before UK Treasury Select Committee on Wednesday that bringing inflation to the 2% target is very important.
On the Eurozone front, higher preliminary inflation in December as anticipated has strengthened European Central Bank (ECB) policymakers to remain hawkish longer than the BoE. ECB Governing Council member and Bank of France President, Francois Villeroy de Galhau, said on Thursday that he “commits to an inflation back at 2.0% by 2025.”