- Euro finds sellers at 0.8775 and continues to move sideways.
- The British economy contracts less than expected in the third quarter.
- EURGBP: Still holding the three-month forecast at 0.89 — Rabobank.
The euro’s attempted recovery from Thursday’s lows of 0.8695 was capped at 0.8775 in the early American session on Friday, before pulling back to 0.8740. From a broader perspective, the pair remains variant. At 0.8687, the cross is trading virtually unchanged on the weekly chart.
UK GDP data shows milder-than-expected contraction in Q3
According to preliminary estimates, UK Gross Domestic Product contracted 0.2% in the third quarter, well above the -0.5% expected by market consensus after growing 0.2% in the previous quarter. In year-on-year terms, the British economy slowed to 2.4% from 4.4%, also improving expectations for a 2.1% reading.
These figures confirm the forecasts of the Bank of England, which anticipates that a long recession is coming. The market, however, has shown some relief that has been reflected in a moderate appreciation of the pound sterling.
EURGBP: Keeps the three-month forecast at 0.89 — Rabobank
Looking ahead, analysts at Rabobank maintain a positive outlook on the pair: In the coming weeks, we would expect GBP investors to focus on the impact of the Autumn Statement on Nov 17, PM Sunak’s ability to keeping Tory together, UK growth/recession outlook and BOE interest rates (…) We would expect protocol related issues to only have a clear impact on GBP as deadlines approach related. We are still not convinced to change our bearish view on the pound and we maintain a 3-month forecast of 0.89 for EUR/GBP.”
Technical levels to watch
Source: Fx Street
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