EUR Steadies vs GBP Ahead of Crucial UK GDP Report
The Euro (EUR) traded steady against the Pound Sterling (GBP) on Wednesday, with EUR/GBP holding near the 0.8540 zone after two consecutive declines. The Pound had briefly hit a two-week high earlier in the day before retracing following the release of the German Consumer Price Index (CPI), which showed inflation remained sticky in July.
The Bank of England's (BoE) decision to leave its key rate unchanged at 3.75% in early-July, as expected, was closely watched by traders. However, three of the nine MPC members pushed for a 25 basis-point hike, pointing to inflation risks skewed to the upside on higher energy prices tied to the conflict in the Middle East.
On Thursday, the preliminary UK GDP will be the main catalyst for the cross, with economists expecting growth of 0.4% QoQ in the three months to June, down from 0.6% in the first quarter. A clear miss in this forecast could lead to a sharp reaction in Sterling.