EUR/GBP recovers from 0.86 before to German GDP

During the Tokyo session, the EUR/GBP exchange rate drew renewed interest at 0.8610. Prior to the release of German Gross Domestic Product (GDP) statistics, the asset broke to the upside from a tight consolidation between 0.8610 and 0.8620.

As S&P500 futures have cut their gains, the risk profile has sensed a rebound. In addition, the US dollar index (DXY) has experienced a pullback to approximately 110.35.

Following the European Central Bank's announcement of monetary policy on Thursday, the bulls of common currencies experienced a severe sell-off (ECB). Christine Lagarde, president of the European Central Bank (ECB), announced a 75 basis point (bps) consecutive rate hike and a push of interest rates to 1.5%, the highest level since 2009, to combat the record inflation spike and assure a quick return to 2%.

The euro bulls were hit by the less aggressive tone of policy instructions. Commerzbank analysts note that Christine Lagarde seemed dovish during the press conference, but they still anticipate a significant rate hike at the December meeting.

In the future, investors will concentrate on German Gross Domestic Product (GDP) numbers. According to the consensus, the annual GDP growth rate for the third quarter will be 0.8%, a decrease from the previous reading of 1.7%. On a quarterly basis, the GDP numbers will indicate a 0.2% decline.

On the front of the United Kingdom, novel UK Prime Minister Rishi Sunak has moved his whole focus to reducing the mountain of debt in order to achieve financial stability. According to the Financial Times, Sunak is considering tax increases and spending cuts of up to GBP 50 billion, which is in line with the bank of England's plan (BOE). Next week, investors will focus solely on the Bank of England's monetary policy. As the first interest rate decision following Sunak's nomination as UK prime minister, the impact of the monetary policy decision will be enormous.