The Euro climbs against the Pound despite UK growth beating forecasts, as traders focus on European Central Bank policy expectations.
EUR/GBP advanced to 0.8549, ending a three-day decline, as hawkish European Central Bank expectations offset stronger-than-expected UK economic data. The cross gained despite the UK economy growing 0.3% in June, above the forecast for no growth.
UK GDP expanded 0.4% in the second quarter, matching expectations but slowing from 0.6% in Q1. Year-over-year growth reached 1.2%, surpassing the 1.1% estimate. Analysts noted that while growth exceeded the Bank of England’s July projection, inflation and labor data remain key for policy decisions.
Traders are now awaiting next week’s UK Consumer Price Index data for further clues on the BoE’s rate path. Most policymakers recently indicated that financial conditions provided sufficient tightening insurance.