UK GDP in focus likely to lead to some EURGBP consolidation

EURGBP is expected to stabilize somewhat this week following last week's sharp depreciation. With little data of interest, the main focus will be the release of the preliminary Q3 GDP (Tuesday). A 0.5% q/q growth rate is expected, down from 0.7% q/q in Q2 and below consensus expectations of 0.6% q/q growth rate. 

"If our forecast materializes, the carryover on 2015 growth would be 2.3pp. We expect GBPUSD to resume lower on the expected GDP miss", says Barclays.

Over the medium term, GBP is expected to outperform the EUR due to a significant growth differential but domestic headwinds should push cable lower over the coming year. UK economic growth remains relatively robust, but fiscal consolidation will likely weigh on UK activity in an environment of surprisingly low inflation and the underpriced impending EU referendum.