- The Euro has risen on the week against the Pound as the Bank of England has turned dovish.
- Eurozone data limits bullish capacity.
- Next week, with a calendar full of data, the pound will have the loser.
The EUR/GBP pair advanced during the week, with the euro gaining ground against the British pound. The bearish tone from the Bank of England (BOE) has weighed on the British Pound and, despite the economic data from the European Union (EU), the Euro is the winner of the week.
The Euro started the week lower, after the EU Purchasing Managers’ Index (PMI) figures showed that economic sentiment is on the decline for the continent. Later, Eurostat sales figures showed the retail sector contracted by -1%, further limiting the euro’s upside potential.
The Bank of England appears dovish
On the UK side, Bank of England Governor Andrew Bailey and members of the Monetary Policy Committee (MPC) testified before the British Parliament on inflation expectations and the broader economy.
Governor Bailey and his MPC colleagues took a dovish stance, stating that the BoE’s rate hike cycle may have peaked, and expressing concern that overaction by the UK central bank could worsen the chances of achieving a “soft landing” for the national economy.
The softening of the BOE’s stance led to a broad-based decline in sterling during the week.
Next week: United Kingdom, with a lot of data
The economic calendar for the first half of next week is notably GBP-heavy, with very few significant releases from the EU.
Huw Pill, chief economist at the Bank of England, and Catherine L. Mann, a member of the Monetary Policy Committee, will appear on Monday. UK unemployment and wages figures will be released on Tuesday, with UK manufacturing and GDP data on Wednesday.
A slight worsening is expected in wage growth, unemployment and industrial data.
UK economic calendar, Monday to Wednesday. All times in GMT.
EUR/GBP Technical Outlook
The Euro-Pound pair has consolidated since June, cycling in a rough range between 0.8660 and 0.8520. The resistance zone lies between 0.8740 and 0.8720, while if there is a downside breakout, the pair could give way below the 0.8500 level.
A break below 0.8500 would put the euro at 13-month lows against the pound.
EUR/GBP Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.