EUR/GBP Retreats on Dovish ECB Comments About Eurozone Economy
Skerdian Meta • 2 min read
EUR/GBP has been bullish for most of this month, reversing from around 0.8520s and extending for the 0.8704 mark on Friday, ending the week with more than a full percent of upside gains, with the Euro (EUR) having its best trading week versus the Pound Sterling (GBP) since early February.
The GBP plummeted after the Bank of England surprisingly held interest rates steady, with GBP/USD falling below 1.22 a while ago today. The outlook has shifted substantially in recent weeks, and investors are apprehensive about future growth prospects of the UK economy. BOE governor Bailey stated that if economic growth continues to worsen, they will likely not need to deliver any more raises. Inflation is still high despite cooling off recently, and has a long way to go down before policymakers can contemplate reducing rates.
But the Eurozone economy is doing equally or even worse than the UK economy, turning the ECB dovish as well, and today’s comments from ECB members confirmed that, sending EUR/USD below 1.06. ECB’s Schnabel said earlier that the activity in the Eurozone is clearly moderating while Lagarde popped up later also with dovish remarks.