UK’s second quarter (Q2) Gross Domestic Product (GDP) shrank less than expected. The EUR/GBP is trading around the 0.8450 mark and could edge higher to the 0.8485 area, according to economists at ING.

2Q22 UK GDP data not quite as bad as expected

“UK 2Q22 GDP data came in marginally better than expected. The data can probably keep expectations alive that the Bank of England (BoE) will hike 50 bps on 15 September.” 

“And ever-rising expectations for how much higher the UK energy price cap will be adjusted (and what it means for the peak of UK inflation) will probably mean the BoE stays hawkish all year.”

“EUR/GBP is slightly stronger than we thought and could edge up to the 0.8485 area. But given the challenges faced on the continent, we would not chase EUR/GBP higher.”