- EUR/GBP drifts higher to around 0.8705 in Friday’s early European session.
- The French government survived a no-confidence vote in Parliament on Thursday.
- The UK economy expands by 0.1% MoM in August ahead of the key budget.
The EUR/GBP cross trades on a stronger note near 0.8705 during the early European session on Friday. The Euro (EUR) edges higher against the Pound Sterling (GBP) after the French government survived a no-confidence vote. Traders brace for the speeches from the Bank of England (BoE) policymakers, including Huw Pill and Megan Greene, later on Friday.
French Prime Minister Sebastien Lecornu survived two no-confidence votes in parliament after separate motions were lodged against him. Lecornu’s survival gave France a moment to breathe after weeks of political turmoil that plunged the country into deep uncertainty over its future and weighed on its economy. This, in turn, provides some support to the EUR against the GBP.
The upside for the cross might be limited amid signs of recovery in the manufacturing sector and a slight Gross Domestic Product (GDP) growth, which might underpin the GBP. However, the relief is expected to be temporary as the UK government prepares to unveil the Autumn Budget next month, which will likely raise taxes to support day-to-day operations.
The Office for National Statistics (ONS) reported that the UK economy grew by 0.1% MoM in August, compared to a contraction of 0.1% in the previous reading. This figure came in line with the expectation. Meanwhile, the Industrial Production rose by 0.4% on a monthly basis versus -0.4% prior, faster than estimates of 0.2%.
