Upbeat German factory data leaves Euro rangebound against British Pound

• 0.8340 marks the midpoint of the weekly range, with EUR/GBP trading nearby.
• Despite strong German Industrial Production figures, the Euro has gained no meaningful momentum.
• Expectations of additional BoE interest rate increases continue to underpin the Pound.

EUR/GBP trades just above 0.8340 on Friday. The pair sits midway through its recent 0.8320-0.8360 range, with risk aversion restraining buyers. Against the British Pound (GBP), the Euro (EUR) remains directionless despite the strong German Industrial Production figures published earlier in the day.

September’s German Industrial Production growth reached 0.7%, up from 0.1% in August, according to figures published earlier on Friday. Markets had expected output to remain flat. Automotive and pharmaceutical production led the gains, the report showed, while construction output and machinery and equipment manufacturing declined.

A 0.1% fall in September is forecast for Eurozone Retail Sales, reversing August’s 0.1% increase. Eurostat is due to publish the report later on Friday. Unless the figures substantially exceed expectations, they are unlikely to lend the Euro support.

BoE rate hike expectations limit Pound downside

The Bank Rate reached 4% after the Bank of England (BoE) raised interest rates for the first time in more than three years, meeting investor expectations. Some policymakers also signalled further monetary tightening. Governor Andrew Bailey echoed that view at the subsequent press conference.

Although the decision drew little reaction from the Pound, the currency has so far held steady near 19-month lows against the Euro, with risk-averse trading providing support. A de-escalation in the Iran war poses a risk here: lower oil prices would likely raise questions over the BoE’s commitment to tightening. That could weaken the Pound and probably help the Euro recover.