- The EUR/GBP rose recently to around 0.8495 during Thursday’s early European trading session, marking a 0.27% increase for the day.
- The UK’s GDP showed a 0.3% month-over-month growth in April, falling short of expectations.
- ECB President Lagarde mentioned that the central bank is well-positioned regarding interest rates but hinted at a potential pause in rate changes.
The EUR/GBP experienced upward momentum, settling at about 0.8495 early Thursday. This suggests that the Pound Sterling (GBP) might be losing ground to the Euro (EUR) following the disappointing UK growth figures. Market focus has now shifted to speeches from European Central Bank (ECB) officials, scheduled for later today.
According to data from the National Bureau of Statistics (ONS), the UK economy registered a 0.3% month-over-month growth in April, a decline from March’s 0.2% growth. This result was lower than the anticipated 0.1% drop.
In addition, industrial production dropped by 0.6% in April, slightly better than the previous month’s -0.7% but still weaker than the market expected at -0.5%. This disappointing GDP data likely provoked immediate selling pressure on the GBP.
With this unanticipated UK GDP performance and soft employment data released earlier, the Bank of England (BOE) may reconsider its interest rate plans, possibly leading to cuts sooner than previously thought. This could certainly exert additional selling pressure on the GBP in the near term.
On the Euro side, hawkish comments from the ECB seem to have provided some support. Lagarde noted that the central bank might be approaching the end of its easing cycle following their recent policy discussions. She also mentioned that their current rates are in a “good position,” despite ongoing concerns related to Trump’s tariffs creating significant uncertainty.
