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The EUR/GBP pair recovered and keeps rising near 0.8630, seeing nearly 0.40% gains. The Euro is one of Wednesday’s top performers amongst its rival currencies.
No relevant data will be released for either economy. Tightening expectations of BoE and ECB to dictate the pace. At the middle of the week, the EUR/GBP recovered ground and jumped above the 20-day Simple Moving Average (SMA) of 0.8600.
The EUR trades with gains against the USD, CHF, JPY, and AUD on higher German yields while the Pound trades soft.
On a quiet trading week, tightening expectations dictate the pace of the EUR/GBP cross, and rising German yields are pushing the pair higher. The 10-year bond yield rose to 2.47%, while the 2-year yield stands at 3.09% and the 5-year yielding 2.53%, respectively, making the EUR gain interest against its rival currencies.
The focus now shifts to next week’s Q2 Gross Domestic Product (GDP) and inflation data from July from the European Union, which will help investors to model the next data-reliant European Central Bank (ECB) decision.
On the Sterling’s front, GDP data on Friday will be key. The Bank of England reported in its latest monetary policy statement that it no longer expects a recession, so the economic outlook in the UK will have an impact on the bets of investors on the next BoE’s decision.
As for now, investors still bet, according to the World Interest Rate Possibilities (WIRP), a terminal rate of 5.75%, meaning an additional 50 basis point tightening for the rest of this cycle.
