Eurgbp Trades Higher

Eurgbp Trades Higher by Andrew Blumer last updated on October 10, 2023

EUR/GBP Trades Near 0.8670, Focus Shifts To Lagarde's Speech

EUR/GBP continues its bullish descent for the 3rd day in a row and was last seen trading hands near 0.8670. The reason behind the bullish momentum in the EUR/GBP can be attributed to the rumors that the BoE can now better handle the consequences arising from high-interest rates.

For now, the Bank of England is on a pause after raising the policy rate to around 5.25%. This was done by the BoE in an attempt to prevent any economic slowdown. In addition, the Bank of England also wants to wait and see the impact of interest rates on the UK's economy.

Upward Revison Of Minimum Wage

Moving forward, the GBP is expected to receive high volatility as the UK's FM will announce an upward revision to the minimum wage. At the same time, the UK's FM is expected to dismiss any sort of tax cuts as well.

And if we look at the PMI (UK) from the S&P Global, September's reading was 44.3 while last month's reading was 44.2. As per the market forecasts, the UK's PMI was expected to stay the same.

If we look at the other side, the markets are 50/50 about any new policy change introduced by the ECB. The markets believe that the inflation in the European Union is still above the bank's target, which means there's a higher chance of recession in the EU.

Keeping this in view, investors are now closely looking at any new statements or indicators that will provide insight into what the ECB is thinking about!

An important economic metric from the EU's side was Germany's PMI, which showed further contraction from the last's month print. Similarly, the unemployment rate and the PMI of the Eurozone is also unchanged which means no improvement on that front as well.

Looking ahead, the markets will be looking at the lineup of speeches from the ECB members and officials.