GBP: Riding the Sterling Bullish Wave Despite Industrial Production Decline

GBP: Hard to buck the sterling bullish trend

EUR/GBP pressing lower again this morning: a move below the 0.8540 support would set the pair back to pre-Mini-Budget crisis levels (August 2022). UK GDP figures for April matched expectations, showing 0.2% MoM growth, while industrial production declined by more than expected (1.9% YoY).

Still, the latest evidence from employment and wage growth has prompted yet another repricing higher in BoE rate expectations, with 132bp of tightening priced in by year-end. With short-dated gilts reaching their highest levels since 2008 yesterday, it remains hard to buck the EUR/GBP bearish trend, especially ahead of the ECB risk event, but our medium-term view remains bullish on the pair.