Listen to the market mood for the EURGBP currency pair in the coming session:
The GBP should remain strong as the surprise resignation by UK Finance Minister Sajid Javid has meant that all eyes are on his replacement Rishi Sunak. Sunak expected to increase fiscal spending (Gov’t spending) and therefore relieve the Bank of England from needing to cut interest rates, hence the strong GBP buying we saw yesterday.
The EUR remains weak at the moment due to a continued slowdown in eurozone growth and expectations of further ECB easing. Today’s German GDP data showed that the EU’s biggest contributor only narrowly missed contraction by printing a Q4 GDP number of 0.0%.
Therefore, expect EURGBP sellers at pullbacks.
Risks to this outlook
Any very positive eurozone news from the EU GDP data at 10GMT or negative news about fiscal spending from Rishi Sunak.