The Euro (EUR) edges up for the second consecutive day against the British Pound (GBP) on Wednesday, trading halfway within the monthly range.
The EUR/USD pair extends its recovery to 0.8560 after bouncing from 0.8546 on Tuesday, as traders bide their time awaiting US PCE inflation figures, with the calendar in the Eurozone and the UK practically void, The Euro drew some support from the upbeat German macroeconomic figures released on Tuesday
The second quarter’s German Gross Domestic Product was revised higher, while the IFO Business Climate Index for August rose to its highest reading in one year, with both the sentiment about the current business situation and the economic expectations improving beyond the market forecasts. ING: Carry trade supports the Sterling The UK calendar is practically void this week, but FX analysts at ING argue that, in the current “low volatility environment, sterling is probably still enjoying some carry demand given it is one of the highest, volatility-adjusted currencies in G10.” Against that backdrop, they expect “EUR/GBP can probably hang around these 0.8550 levels for the time being.” ING adds that “our call is that the BoE does not need to hike again, but that the realisation of that may not weigh on sterling until later in the year,” suggesting any policy-driven drag on the Pound is likely to be delayed rather than immediate. Looking ahead, ING experts forecast that, “if calm is indeed restored in the bond market, expect the pair to return to tracking short-term rate differentials closely.” In that context, they reiterate a constructive view on EUR/GBP, stating that “we still expect no hikes and a move to 0.870 in the coming months on the back of dovish repricing in the GBP front end.” Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone.
It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange…