EUR/GBP Depreciates on ECB Rate Cut Expectations
The EUR/GBP currency pair is experiencing a decline, currently trading around 0.8340 during Asian trading hours on Monday. This depreciation is primarily driven by the increasing likelihood of the European Central Bank (ECB) implementing an interest rate cut in October.
UK GDP Growth Falls Below Expectations
In the second quarter, the UK Gross Domestic Product (GDP) rose by 0.5% quarter-over-quarter, slightly lower than the anticipated and previous increase of 0.6%. On an annual basis, the GDP growth rate was 0.7%, also falling short of forecasts.
Pound Sterling Strengthens on BoE Rate Cut Expectations
Despite the lower-than-expected GDP growth, the Pound Sterling remains buoyed by expectations that the Bank of England (BoE) will adopt a more gradual approach to interest rate cuts.
Market Insights and Economic Indicators
- The EUR/GBP cross is under pressure due to the ECB’s potential rate cut in October.
- Traders are closely watching economic data releases from Germany, including the preliminary Consumer Price Index (CPI) for September.
- Lower-than-expected inflation in France and Spain reinforces the likelihood of the ECB’s policy-easing measures.
Inflation Data from France and Spain
France’s inflation rate grew by 1.5% year-over-year in September, below expectations and a decrease from the previous month. In Spain, the Harmonized Index of Consumer Prices (HICP) increased by 1.7% annually, lower than forecasted.
Month-on-month, both countries experienced declines in price pressures, further indicating potential challenges for the Eurozone economy.
Overall, the currency markets are reacting to a mix of economic indicators and central bank policies, shaping the direction of currency pairs like EUR/GBP.