EUR/GBP continues the losing streak around 0.8650 despite upbeat German data

• EUR/GBP loses ground amid Germany’s Factory Orders showed robust performance.
• BoE’s dovish tone surrounding the interest rate trajectory could undermine the GBP.
• The varying opinions among ECB officials underscore the challenges facing the Eurozone economy.

EUR/GBP continues the losing streak that began on Tuesday, trading lower around 0.8650 during the European session on Friday. On Friday, better-than-expected United Kingdom’s (UK) housing data could provide minor support for the Pound Sterling (GBP).

Halifax House Prices (MoM) declined 0.4% in September compared to the market consensus of a 0.8% decline and the previous reading of a 1.8% decline in August.

However, the British Pound (GBP) is grappling with a period of underperformance, primarily influenced by the unexpected decision of the Bank of England (BoE) to pause its rate-hiking cycle in September. This departure from the trend observed since December 2021, where the BoE opted not to raise interest rates, has introduced a challenging dynamic.

Compounding the situation, the central bank revised its growth forecast for the July-September period from 0.4% to a mere 0.1%. This downward adjustment provides little indication of any inclination to pursue further rate increases.

Additionally, the cross pair was under pressure due to the downbeat Eurozone’s Retail Sales data on Wednesday. However, Germany’s Factory Orders showed robust performance on a monthly basis, which could support the Euro.

The data reported an upbeat figure of 3.9% against the 1.8% expected, swinging from the previous reading of an 11.3% decline. While yearly performance declined by 4.2% compared to the previous 10.1% decline.

The Eurozone appears to be in a phase of observation and prudence regarding potential interest rate hikes by the European Central Bank (ECB). Recent remarks from ECB officials indicate a measured approach, with a key focus on inflation targeting.

According to ECB Governing Council member Tuomas Välimäki, there's a more optimistic outlook as he doesn't foresee a stagflation prospect in the euro area. On the flip side, ECB Chief Economist Philip Lane acknowledges that there is more work to be done to meet the inflation target, signaling a more cautious stance.

The contrasting viewpoints may reflect the intricate and uncertain economic landscape of the Eurozone, which could pose a headwind for the EUR/GBP pair.