Pound euro exchange rate ticks up amid upbeat UK GDP
The pound euro (GBP/EUR) exchange rate is drifting higher this morning following the publication of the UK’s latest GDP reading.
At the time of writing, GBP/EUR is trading at around €1.1669, up roughly 0.2% from this morning’s opening levels.
Pound (GBP) supported by GDP
The pound (GBP) has rebounded this morning and is trending broadly higher against the majority of its peers following the publication of the UK’s latest GDP reading.
The preliminary estimate for the second quarter of the year printed in line with market estimates this morning, coming in at 0.6%, only marginally dipping from 2024’s first quarter, which came in at 0.7%.
The data highlighted a second consecutive strong GDP reading this year, propelling the British economy further away from its shallow recession at the end of last year, allowing GBP exchange rates to gain modest ground against its counterparts.
ONS Director of Economic Statistics Liz McKeown commented:
‘The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year. Growth across the three months was led by the service sector, where scientific research, the IT industry and legal services all did well. In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing.’
Elsewhere, an upbeat market mood has further lifted the increasingly risk-sensitive pound this morning, as it continues to rise against its safer rivals.
Euro (EUR) undermined by risk-on flows
The euro (EUR) is struggling to garner investor attention this morning as an absence of economic data releases sees the single currency struggle to find a clear trajectory.
In addition to the lull in Eurozone data, the common currency is being undermined by this morning’s increase in risk appetite.
As markets continue to opt for riskier assets moving into the second half of the week, the acutely safe-haven euro remains on the defensive against the majority of its peers.
Pound euro exchange rate forecast: UK retail sales in focus?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate for the remainder of this week will likely be the publication of the UK’s latest retail sales data.
Scheduled for release tomorrow, the upcoming release is forecast to show a solid rebound in retail sales in July.
Should the data print as expected and rise from a previous reading of -1.2% to 0.5%, the pound could close the week on the front foot.
Turning to the euro, as the Eurozone’s data calendar will remain light for the remainder of this week, EUR exchange rates will likely continue to be driven by market appetite for risk.
Will this morning’s cheery trade prevail and keep EUR on the defensive? Or will a move to downbeat trade lift the single currency?