Euro fluctuates within range against British Pound despite upbeat German factory data

• EUR/GBP trades near 0.8340 at the midpoint of its weekly range.
• Stronger German Industrial Production figures have given the Euro little impetus.
• Expectations of additional BoE interest rate rises continue to underpin the Pound.

Germany’s upbeat Industrial Production figures, published earlier on Friday, have offered little benefit to the Euro (EUR), which remains directionless against the British Pound (GBP). With risk aversion restraining bullish sentiment, EUR/GBP is trading just above 0.8340, midway through the 0.8320-0.8360 range seen over the past few days.

September’s German Industrial Production growth picked up to 0.7%, according to figures published earlier on Friday. That exceeded market forecasts for an unchanged reading and followed growth of 0.1% in August. Automotive and pharmaceutical production led the gains, the report showed, whereas output fell in construction and in machinery and equipment manufacturing.

Attention later on Friday turns to Eurostat’s Eurozone Retail Sales report. September sales are forecast to fall by 0.1%, reversing August’s 0.1% rise. Unless the figures substantially exceed expectations, they are unlikely to offer the Euro any support.

Pound declines remain contained as markets anticipate further BoE tightening

By raising the Bank Rate to 4%, the Bank of England (BoE) delivered the interest rate increase investors had expected, its first in more than three years. Some policymakers also signalled that further monetary tightening could follow. 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 support coming from risk-averse market sentiment. A de-escalation in the Iran war presents a risk here: lower oil prices would be likely to call the BoE’s commitment to tightening into question, weakening the Pound and probably aiding the Euro’s recovery.