Pound Euro (GBP/EUR) Exchange Rate Trades Near Nine-Month High amid BoE Bets
(Updated 14:35, 14/06/23) The Pound Euro (GBP/EUR) exchange rate strengthened today, briefly brushing a nine-month high, after positive UK GDP data.
The latest report showed that the British economy expanded in April, raising the likelihood of more aggressive action from the Bank of England (BoE).
However, the Euro (EUR) was also garnering support after better-than-expected industrial production data. Output grew by 1% in April, recovering from a less-severe-than-estimated contraction of 3.8% in March.
Additionally, a weaker US Dollar (USD) boosted EUR demand, thereby capping the Pound Euro pair’s upside.
At the time of writing, GBP/EUR is trading at around €1.17025, having briefly reached €1.1708 earlier in the session.
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Pound Euro (GBP/EUR) Exchange Rate Ticks Up as UK Economy Expands
The Pound Euro (GBP/EUR) exchange rate is rising this morning after the UK’s latest GDP data showed that the country’s economy expanded in April.
At the time of writing, GBP/EUR is trading at around €1.1694, modestly up on the day.
Pound (GBP) Buoyed by UK Economic Recovery
The Pound (GBP) is gaining ground this morning following the publication of the UK’s latest GDP data.
The UK economy grew by 0.2% in April, recovering from its 0.3% decline in March, suggesting that the country remains resilient.
While the results are positive, and could provide the Pound with support today, many economists have expressed concern.
Suren Thiru, Economics Director at the Institute of Chartered Accountants in England and Wales (ICAEW), commented:
‘Although GDP rebounded in April, this reflects more the reversal of the squeeze on service sector activity from poor weather in March, than a meaningful improvement in our underlying growth trajectory.
‘April’s upbeat reading should be followed by a notable decline in May GDP as the extra bank holiday for the Coronation and ongoing strike action will have stifled activity across much of the economy.’
Despite these warnings, GBP is moving higher. The recovery in the UK economy follows yesterday’s hotter-than-forecast jobs report, with both data releases likely to encourage the Bank of England (BoE) to continue raising interest rates. This is adding to Sterling’s upside.
Euro (EUR) Muted Ahead of ECB Decision
Meanwhile, the Euro (EUR) is somewhat subdued this morning as investors await the European Central Bank’s (ECB) interest rate decision tomorrow.
While the bank is likely to raise rates by 25bps, there is uncertainty over the future of the ECB’s tightening cycle.
As a result, EUR investors are rather cautious today, opting not to take too strong a position on the Euro.
One factor putting pressure on the single currency is the current market mood, as a cheery tone favours the more risk-sensitive Pound over the safer Euro.
Pound Euro Exchange Rate Forecast: Sterling to Stay Strong?
Later this morning, the Eurozone’s industrial production figures for April could provide EUR with some support. Economists expect industrial output in the bloc to have expanded by 0.8%, following a slump in activity in March.
However, hesitancy ahead of the ECB decision could mute EUR movement.
As for the Pound, BoE rate rise expectations could keep Sterling buoyed throughout the session.
Market risk sentiment could also impact the pairing. If the tone remains upbeat, GBP/EUR could extend its upside.