The EUR/GBP Forex prices are consolidating as investors focus on the upcoming European Central Bank (ECB) and Bank of England (BoE) decisions. It was trading at 0.8600 where it had been for the past few days. The price is about 7.36% below its high on September 22.
ECB and BoE decision
The EUR/GBP exchange rate will be in the spotlight this week as investors look for the important Forex news of the month.
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On Monday, the Office for National Statistics (ONS) said the UK avoided recession in October. The economy expanded 0.5% between September and October. That increase was better than the average estimate of 0.4%.
However, the economy shrank by 0.3% in the three months to October. That contraction was the biggest increase since the first quarter of 2021. In a report last month, a non-partisan government office warned that the UK could be in recession for some time.
The next catalyst Euro to do GBP The latest data on UK consumer and producer inflation, scheduled for Wednesday, will be the price. Economists expected the data to show headline inflation at 10.9% in November and core inflation easing to 6.4% from 6.5%.
The ECB and BoE’s interest rate decision will be the next key event to watch this week. Economists polled by Reuters expect the ECB to raise rates by 0.75% for the second month in a row. This would indicate that rates will begin to rise at a slower pace in the first quarter of the year.
On the other hand, the BoE will raise rates by 0.50% in an attempt to reign in elevated inflation. Investors will respond to their forecast for next year’s hikes. As the UK is expected to remain in recession for a while, the Bank will slow down on rate hikes. As we wrote HereThe Federal Reserve will also deliver its rate decision this week.
The EUR/GBP exchange rate has been in a tight range over the past few days. As a result, the pair consolidates at the 25-day and 50-day moving averages. It is also hovering at an important support level, where it has struggled to break down this year.
The Relative Strength Index (RSI) remains below the neutral 50. Hence, the pair will have a bearish breakout as sellers target the key support level at 0.8400.