- The EUR/GBP has fallen to around 0.8615 during early European trading on Thursday.
- The UK’s quarterly GDP rose by 0.3% in the second quarter of 2025, which is stronger than anticipated.
- A more long-term perspective on ECB rates might help stabilize the EUR from significant losses.
The EUR/GBP exchange rate is slipping to approximately 0.8615 in the early hours of European trading on Thursday. The British Pound (GBP) is gaining strength against the Euro (EUR) following the release of data on the UK’s Gross Domestic Product (GDP). This shift occurs ahead of the preliminary GDP reading for the Eurozone, which is set to come out later in the day.
Data from the Office for National Statistics (ONS) indicated that the UK’s economy grew by 0.3% quarter-on-quarter in the second quarter of 2025, an improvement from the 0.7% growth seen in the previous quarter and surpassing expectations of only 0.1% for this period.
Additionally, the UK GDP saw a year-on-year increase of 1.3% in the second quarter, exceeding the market consensus of 1.0%. In June, the monthly GDP recorded a growth of 0.4%, recovering from a slight decline of 0.1% in May. The positive GDP figures are likely to attract some buyers to the GBP.
On the Eurozone side, market participants are increasingly factoring in a prolonged interest rate environment from the European Central Bank (ECB), which could help minimize potential losses for the Euro. The Euro Short Term Rate (ESTR), the ECB’s official overnight benchmark rate, is now projected to be around 60% with a deposit rate of 1.92% expected by March 2026, reflecting a 25 basis point increase.
