EUR / GBP defends 0.8400 ahead of critical EU / UK data
- EUR / GBP is trading slightly higher on Friday during Asian trading hours.
- UK retail sales, Eurozone / German PMIs remain the topic of discussion for the session.
- British Prime Minister Johnson is calming down to undermine the terms of the Brexit-led NI protocol.
EUR / GBP extends the gains of the previous session on Friday. The cross currency pair managed to rebound higher after testing the annual low at 0.8422 during the US session. As of this writing, EUR / GBP is trading at 0.8431, up 0.07% for the day.
The common currency has gained momentum against the British pound in the past two sessions amid expectations that the European Central Bank (ECB) will become less accommodative in the near future. ECB policymaker Pierre Wunsch has favored a gradual exit from the central bank’s expansionary monetary policy, according to Reuters. The market anticipates that the ECB could push forward interest rate hikes in 2022 compared to its initial estimates of 2024. On the economic front, consumer confidence in the euro zone fell from -4.8 in October against -4.00 the previous month.
On the flip side, the pound appears to be benefiting from the hawkish Bank of England (BOE) and Brexit optimism. BOE chief economist Huw Pill said UK inflation is expected to hit 5% by early 2022.
On top of that, British Prime Minister Boris Johnson has said he is ready to compromise on the terms of the Northern Ireland Protocol (NI) to overcome the stalemate in Brexit talks. Gains were limited, following dismal UK consumer confidence data GfK, which stood at -17 in October compared to -13 the month before.
It should be mentioned that S&P 500 futures are trading at 4,537, down 0.09% for the day.
For now, traders are waiting for UK retail sales and German / EU PMI data to assess market sentiment data.