In 2023’s fall, the EUR/GBP rate market will experience a bullish mood: the rate has increased by over 2% since September 1 and price dynamics have formed a rising channel (shown as blue). On Friday the price was at its highest for approximately six months.
News about the Bank of England’s and ECB’s policies to combat high inflation and what signals are given by the economy in these conditions, for example, can be considered growth drivers.
The UK GDP news was better than expected. (Actual = +0.2% in the third quarter, expectations =+0.1%) But the pound did not react positively, from a fundamental perspective, because:
→ Firstly, the details show that a significant contribution to GDP growth came from imports, a category that tends to be quite volatile between quarters. Other key areas — notably consumption and business investment — posted negative results in the quarter.
→ Secondly, GDP may decline due to the fact that the high rate policy pursued by the Bank of England should be more fully felt in the coming 2024.
If the pound didn't strengthen on Friday on the GDP news, could the bullish trend continue?
This is an important thing to remember…
