Investors are eagerly waiting the BOE and ECB to announce their interest rate decisions which would be announced on Thursday following the strong quarterly economic data from the United Kingdom.
In terms of UK’s interest rate decision, all BOE’s policy members are expected to vote in favor of an interest rate hike for the second time in a decade to reach 0.75 percent.
The country’s economy is growing solidly where UK’s GDP rose for the month of July by 0.1 percent to beat its expectations at 0.3 percent. The economy grew by 6 percent over the quarter ending by July the fastest pace in almost a year, according to National Statistic Report that was released on Monday.
In terms of inflation data, UK’s annual CPI came in line with the expectations as it rose by 0.1 percent reaching 2.5 percent, while the Core CPI year-on-year remained flat at 1.9 percent as the expectations showed.
Moreover, the country’s unemployment rate remained flat at 4 percent as the expectations showed for the quarter ending by July. While the average earning hours including bonus rose by 0.2 percent to reach 2.6 percent. Furthermore, average earnings excluding bonus rose by 0.2 percent above the expectations by 0.1 percent as it recorded 2.9 percent during the second quarter of 2018.
Regarding ECB’s interest rate decision, the interest rate is expected to be unchanged at 0 percent and is expected to remain steady until summer 2019 at least as the bank is trying to achieve its price stability.
On the other hand, the central bank is expected to keep a dovish outlook-guidance where its QA program is still needed to support the inflation development and domestic prices over the medium term.
On economic side, the ECB reported on Friday that the European Union’s annual GDP fell by 0.1 percent reaching 2.1 percent, the figure came in lower than the expectations of 2.2 percent while the quarterly figure remained steady at 0.4 percent along with the expectations.
Regarding, job’s data in the region, the unemployment rate quarterly figure came in line with expectations as it remained flat at 0.4 percent while it rose from 1.4 to 1.5 percent on its yearly basis.
Furthermore, if the decision of hiking the interest rates came as expectations, investors probably will move their investment toward the GBP and EUR pairs, thus strengthening both currencies against the U.S. Dollar duo to their higher levels of correlation.