GBP Surges Against EUR as BoE Ponders Rate Hike

The British Pound (GBP) has strengthened against the Euro (EUR) after the UK's second-quarter GDP was revised higher to 0.5% QoQ from 0.4%, while the annual growth rate was raised to 1.4% from 1.2%. The improved economic outlook gives the Bank of England (BoE) more room to raise interest rates to combat inflation, which is currently above target.

BoE policymaker Catherine Mann recently stated that the current stance is not sufficiently tight and that raising interest rates can ensure a sustainable return to 2% inflation. The Eurozone's economic growth has been hindered by rising energy costs and high government borrowing costs in France, limiting demand for the shared currency.

The EUR/GBP cross remains under pressure after last week's rejection from the 0.8600 mark. It currently trades around 0.8537, its lowest level since mid-August. Thursday's manufacturing data offered some support to the Euro, but the cross remains on the back foot for the fifth consecutive day.