Pound Euro (GBP/EUR) Exchange Rate Jumps after UK Economy Expands
(Updated 10:10, 10/3/23) The Pound Euro (GBP/EUR) exchange rate shot higher this morning, extending yesterday’s gains, after the UK’s latest GDP report beat forecasts.
The British economy expanded by 0.3% in January, above expectations of a 0.1% rise.
The UK Chancellor of the Exchequer, Jeremy Hunt, said Britain was more ‘resilient’ than many had feared:
‘In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.
‘Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.’
The latest data has cheered GBP investors, while also prompting bets on more interest rate rises from the Bank of England (BoE). GBP/EUR rallied to €1.1324, a 0.7% rise on day, recouping all of the losses suffered earlier in the week.
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Pound Euro (GBP/EUR) Exchange Rate Extends Upside
(Updated 16:30, 9/3/23) The Pound Euro (GBP/EUR) exchange rate managed to rally today, despite a lack of economic data.
The Pound’s (GBP) recovery came as markets readjusted following the drastic movements in the wake of Federal Reserve Chair Jerome Powell’s hawkish comments earlier in the week. As Sterling was one of the most affected currencies following Powell’s remarks, it also enjoyed one of the most notable recoveries.
Meanwhile, worries about the Russia-Ukraine crisis dented the Euro (EUR). After a huge wave of missile attacks overnight, Zaporizhzhia Nuclear Power Plant lost power. These concerns kept EUR investors on the defensive.
Attention now turns to the UK’s GDP report for January tomorrow morning. Could an expected recovery see GBP/EUR climb even higher?
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Pound Euro (GBP/EUR) Exchange Rate Attempts to Climb amid Data Lull
The Pound Euro (GBP/EUR) exchange rate edged up this morning, without a clear catalyst for the movement. The upside may be due to Bank of England (BoE) interest rate rise bets and a repositioning in markets.
At the time of writing, GBP/EUR is trading at €1.1248, having made modest gains this morning.
Pound (GBP) Firms amid Market Correction
The Pound (GBP) ticked higher against the Euro (EUR) this morning, despite a lack of UK economic data and no high-impact economic headlines.
In the absence of any clear fundamental drivers for the movement, it may have been a market correction after the large shifts earlier in the week. With GBP/EUR having slumped to a one-month low, traders may now think the currency pair had entered oversold conditions.
Furthermore, Sterling seems to be slowly recovering from expectations that the Bank of England may not raise rates this month. Last week, BoE Governor Andrew Bailey implied that the Bank Rate may have peaked, but markets have since dismissed the possibility of a pause at the next meeting. Investors expect at least another 25bps move from the bank, with some even betting on a half-point hike.
Euro (EUR) Subdued amid Lack of Data
Meanwhile, the Euro seems muted today as Eurozone economic data is also thin on the ground.
EUR investors may be unnerved by recent news from Ukraine. Russia launched a huge wave of missile strikes over the past 12 hours, with Ukrainian President Volodymyr Zelenskiy calling it ‘a difficult night’.
Furthermore, the fight for Bakhmut continues. Ukrainian forces have repelled an onslaught on the city for months, with attacks intensifying in recent days. Although Russia has suffered heavy causalities, it continues to attack the strategically important city. If Bakhmut falls, it could be using as a post to stage further offensives deeper into Ukraine.
Pound Euro Exchange Rate Forecast: External Factors in Focus
Economic data for both GBP and EUR is lacking today. As a result, currency investors may look to other factors to influence their trading decisions.
For the Euro, Russia-Ukraine news may stay in the spotlight. Any fresh negative developments, such as intensifying Russian attacks or the increasingly challenging situation around Bakhmut, could weigh on the common currency.
Additionally, the Euro’s negative correlation with the US Dollar (USD) could affect EUR exchange rates. If the ‘Greenback’ strengthens later in the session, it could pressure the Euro.
Turning to the Pound, domestic UK news may drive GBP movement. In recent days, many have grown optimistic that the pay disputes leading to crippling industrial action may be close to a resolution. If more strike action is averted, Sterling could strengthen.