EUR/GBP stays sideways above 0.8600, all focus on UK GDP and factories data

• EUR/GBP consolidates slightly above 0.8600 ahead of UK industrial data.
• The UK's monthly GDP will grow by 0.2% after the contraction in October.
• The ECB is expected to remain hawkish for longer than the BoE.

The EUR/GBP pair is trading slightly above 0.8600 late in the London session. Investors are awaiting UK factory data for November, due out on Friday.

British factory data will be the subject of close attention as it will provide clues to the scale of industrial activities. Fears of a technical recession of the British economy intensified after the Office for National Statistics (ONS) reported a contraction of 0.1% in the third quarter of 2023. The chances of a further contraction of the British economy would be accentuated if the factory report remains moderate.

According to consensus, monthly UK Industrial and Manufacturing Production rose 0.3%. Annual Industrial Production rose 0.7%, compared to 0.4% in October. In the same period, manufacturing production grew by 1.7%, compared to 0.8% previously. The monthly Gross Domestic Product (GDP) grew by 0.2% after contracting by 0.3% previously.

Meanwhile, policymakers at the Bank of England (BoE) are torn between a vulnerable economic outlook and elevated price pressures. The governor of the BoE, Andrew Bailey, reiterated on Wednesday in his appearance before the British Treasury Select Committee that it is very important to place inflation at the 2% target.

In the Eurozone, the increase in preliminary inflation in December, as expected, has reinforced the policy makers of the European Central Bank (ECB), who maintain an hawkish stance for longer than the Bank of England. The member of the Governing Council of the ECB and president of the Bank of France, Francois Villeroy de Galhau, declared on Thursday that he is “committed to returning inflation to 2.0% in 2025.”