- EUR/GBP remained depressed near three-week lows touched in the previous session.
- Friday’s mixed UK economic releases did little to impress bulls or lend any support.
The EUR/GBP cross witnessed some selling during the early European session and dropped to fresh daily lows, around the 0.8530 region in the last hour.
The cross struggled to capitalize on the previous day's late rebound from three-week lows, instead met with some fresh supply on the last trading day of the week. The British pound's outperformance could be attributed to the Bank of England Governor Andrew Bailey's overnight hawkish comments. Answering questions from MPs on the Commons Treasury committee on Wednesday, Bailey said that half of the MPC members already believe the minimum conditions for a rate hike have been achieved.
In contrast, the shared currency was weighed down by the fact that European Central Bank offered no major surprises on Thursday and took a small step toward unwinding the emergency aid. This was seen as another factor that exerted some downward pressure on the EUR/GBP cross. Given the overnight sustained break below the 0.8560 horizontal support, some technical selling further contributed to the offered tone surrounding the cross and supports prospects for additional near-term losses.
On the economic data front, the UK monthly GDP report showed that the economic activity decelerated sharply in July and posted a modest 0.1% growth. Adding to this, the UK Manufacturing Production was broadly flat in July, though Industrial Production came in better than consensus estimates and rose 1.2% MoM. The UK macro releases did little to dent the bullish sentiment surrounding the sterling or lend any support to the EUR/GBP cross, reinforcing the bearish outlook.