GBP/USD: BoE Dented Demand For Pound
  • GBP tumbles against the EUR to an 8-day low
  • BOE hikes interest rate to 1.75%
  • UK economy to enter recession in Q4
  • US nonfarm payrolls job eyed next

The Pound Euro (GBP/EUR) exchange rate tumbled for the second consecutive day following the BOE interest rate hike. The pair declined -0.67% in the previous session settling on Thursday at €1.1865, after trading in a range between €1.1983 – €1.1852.

At 05:55 UTC, GBP/EUR trades +0.04% at €1.1870.

The Bank of England raised the interest rate by 50 basis points to 1.75%, for a sixth consecutive meeting in an effort to tackle inflation. UK’s borrowing costs are at the highest level since 2009 following the biggest rate increase in 27 years.

The central bank said that it’s expecting inflation to peak at 13% by the end of the year while the GDP is forecasted to drop 2.1% – the biggest economic contraction since the aftermath of the subprime mortgage crisis. This means that the UK economy will plunge into a recession in Q4 of 2022.

Elsewhere, according to figures by Destatis, Germany’s factory orders fell by 0.4% in June following a revised 0.2% decline in May.

At the foreign exchange market, the EUR traded higher against a basket of other currencies on Thursday as investors are eyeing the key NFP report.