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Before Eurozone GDP and German Inflation Data, EUR/GBP Gains Purchasing Interest Near 0.8820
Near 0.8820, EUR/GBP has attracted some purchasing interest as investors turn cautious ahead of Eurozone data. The GDP of the Eurozone and the German HICP are of great significance, as they will be the most recent figures before ECB policy is announced the following week. The ECB should raise interest rates further if there are no signs of inflation deceleration in the United Kingdom.
After Thursday's perpendicular sell-off, the EUR/GBP pair has exhibited some attraction near 0.8820. As investors transfer their attention to Eurozone Gross Domestic Product (GDP) and German Harmonized Index of Consumer Prices (HICP) data, the cross exhibits signs of recovery.
As the most recent economic data prior to the European Central Bank's (ECB) interest rate decision, which will be announced the following week, the publication of the preliminary Eurozone GDP and German HICP is of great significance.
According to the consensus, provisional first-quarter GDP growth for the Eurozone was 0.2%, compared to a stagnant performance. Annually, the GDP is anticipated to grow by 1.4%, a lesser rate than the 1.8% recorded previously. Policymakers at the ECB are confident that the Eurozone will avoid a recession as a result of robust consumer spending caused by a labor shortage.
In the meantime, preliminary monthly German inflation is anticipated to have increased by 0.8% compared to the 1.1% rate documented in the previous month. This will provide a measure of solace to ECB policymakers. The ECB's policymakers are of the opinion that the core Consumer Price Index (CPI) has remained stubbornly high.
Analysts at Danske Bank believe that ECB President Christine Lagarde will likely raise interest rates by 50 basis points, with no specific forward guidance but reiterating a data-dependent approach to future policy decisions.
On the pound sterling front, the absence of inflation moderating signals strengthens the case for the Bank of England (BoE) to increase interest rates further. The market expects BoE Governor Andrew Bailey to raise rates by 25 basis points to 4.50 percent at the May monetary policy meeting.
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