GBP finds support despite lower UK GDP

EURGBP is retracing its recent gains from the previous session, trading around 0.8340 during the Asian hours on Monday. The currency cross remains tepid following the release of the gross domestic product (GDP) data for the second quarter from the UK.

GDP grew by 0.5% quarter-over-quarter in the second quarter, slightly below the expected and previous increase of 0.6%. On an annual basis, GDP rose by 0.7%, also falling short of the forecasted and prior growth rate of 0.9%.

The EURGBP cross received downward pressure from the increasing odds of the European Central Bank  implementing another interest rate cut in October.

Traders would likely observe a slew of economic releases from Germany scheduled to be released later in the day, including preliminary Consumer Price Index (CPI) data for September.

Additionally, lower-than-expected inflation in France and Spain has reinforced the likelihood of the third cut in the ECB’s ongoing policy-easing cycle, which began in June. The ECB resumed cutting rates in September after holding them steady in July.

France’s inflation grew by 1.5% year-over-year in September, significantly below the estimated 1.9% and down from the previous release of 2.2%. On a monthly basis, price pressures deflated at a sharp rate of 1.2%, exceeding expectations of a 0.8% decline.

In Spain, the annual Harmonised Index of Consumer Prices (HICP) increased by 1.7% in September, lower than the forecasted 1.9% and a drop from August’s 2.4%. Month-on-month, the HICP fell by 0.1%, contrary to expectations for no change.

(Source: OANDA)