Forex News

• EUR/GBP hits fresh 19-month lows below 0.8340 on track for a 3.15% selloff in a five-week downtrend.
• Eurozone GDP beat expectations in Q3, but the increase in unemployment and high Oil prices keep Euro bulls capped.
• The Pound remains bid with investors bracing for a BoE rate hike next week.

The Euro (EUR) extends losses on Friday as Eurozone macroeconomic data has failed to convince investors, while the British Pound (GBP) rallies across the board with markets pricing in a Bank of England (BoE) rate hike next week. The EUR/GBP pair has hit a fresh 19-month lows at 0.8336, and is on track for a 3.15% selloff in a five-week downtrend.

Preliminary data from Eurostat revealed that the Eurozone’s Gross Domestic Product (GDP) grew 0.4% in the third quarter, below the previous quarter’s 0.6% growth but twice as much as the 0.2% expected. Previously, German GDP numbers also beat expectations, while the French economy contracted against market consensus of a moderate increase.

Investors' optimism about positive Eurozone growth has been offset by the unexpected increase in the Unemployment Rate, which ticked up to 6.5% in September, instead of the 6.4% the market had anticipated.

Beyond that, Oil prices remain near five-month highs, with the barrel of Brent Crude steady above $112.00, posing a significant weight on the region’s economic growth and boosting inflationary risks.

In the UK, focus has shifted to the Bank of England, which meets next week. Recent macroeconomic data revealed that the UK economy keeps growing while inflation remains well above the bank’s target. Against this backdrop, futures markets are nearly fully pricing a 25-basis-points rate hike next week.

Technical Analysis: EUR/GBP nears oversold levels

EUR/GBP trades at 0.8343 at the time of writing, extending its slide within a downward parallel channel and retaining a bearish near-term bias. Momentum indicators endorse the bearish view on the 4-hour chart, but the Relative Strength Index (14) sits near 32, leaning toward oversold territory, which suggests that bears might need to take a pause.

On the downside, a confirmation below Thursday's low at 0.8345 would expose the late March 2025 lows between 0.8315 and 0.8330 ahead of the channel bottom, now around 0.8300.

On the topside, the channel top at 0.8360 is likely to test upside attempts ahead of Wednesday's high, near 0.8385, and the weekly high, just above 0.8400.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Brown Brothers Harriman’s Elias Haddad highlights USD/JPY trading heavy near 157.30 after a hawkish hold from the Bank of Japan (BoJ). The BoJ kept rates unchanged but signaled ongoing tightening, upgraded its inflation outlook and sees upside inflation risks. Haddad expects USD/JPY to stay in a broad range, with deeper AI-related equity stress boosting Japanese Yen safe-haven demand.

BoJ hawkish hold supports Japanese Yen

"USD/JPY is heavy around 157.30. Bank of Japan (BoJ) delivered a hawkish hold. As was widely expected, the BOJ paused tightening and kept rates at 1.25%."

"Importantly, for the first time since adopting the 2% target in 2013, the BOJ declared underlying CPI inflation “generally consistent” with its goal. That strengthens the case for additional rate hikes to ensure inflation remains anchored there."

"Finally, the BoJ made minor growth revisions but raised its inflation forecasts for 2027. The BoJ also continues to see inflation risks “skewed to the upside” and the risk to the economic outlook as “generally balanced.”"

"There was no material shift to BoJ rate expectations. The swaps curve still price in 80% odds of a 25bps BoJ rate hike to 1.50% at the December 18 meeting and nearly 75bps of tightening in the next twelve months."

"As such, USD/JPY will likely continue to trade within a 155.00-160.00 range in the near term. But a deeper rout in the AI trade, can fuel more safe haven demand for JPY and drive the cross below 155.00."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The comments from European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel released during Friday’s European session on Bloomberg signal that the central bank is committed to a chieve price stability.

Comments

ECB will take decisive action if needed to bring inflation back to target.

Consumer-price growth has picked up again.

Can’t be ruled out that prices will continue to rise in the coming weeks.

Higher energy costs being a major contributing factor.

Market reaction

No immediate reaction is seen in the Euro (EUR), following remarks from ECB's Nagel. As of writing, EUR/USD is up 0.22% to near 1.1200.

Nagel flags renewed inflation risks, keeps ECB tightening threat alive

ECB’s Nagel delivers a stronger-than-usual warning on inflation, with an 8.2/10 FXS Speechtracker score notably above the 6.9/10 historic average, signaling a hawkish shift. The pledge that the ECB will take “decisive action if needed” to bring inflation back to target reinforces the perception that further tightening remains firmly on the table.

Nagel’s emphasis that consumer-price growth has picked up again and that it “can’t be ruled out” prices will continue to rise in the coming weeks underscores upside inflation risks. By highlighting higher energy costs as a major contributing factor, the speech supports a narrative of persistent price pressures, which is typically Euro-supportive as markets reassess the probability of additional ECB action.

According to Eurostat, Eurozone preliminary Gross Domestic Product (GDP) growth remains stronger at 0.4% in the third quarter this year, compared to estimates of 0.2%. In the second quarter, the GDP growth was 0.8%. On an annualzied basis, the GDP growth rate remained unexpectedly stronger at 1.3%, while it was expected to cool down to 1.1% from the previous reading of 1.2%.

The Unemployement Rate in September remains stable at 6.5%, higher than 6.4% estimates. The August figure was revised higher from 6.4%.

Market reaction

A mild positive action is occurs in the Euro (EUR), following the data release. As of writing, EUR/USD is up 0.23% to near 1.1202.