Pound euro exchange rate dips following UK GDP
The pound euro (GBP/EUR) exchange rate is ticking lower this morning following the publication of the UK’s latest GDP reading.
At the time of writing, GBP/EUR is trading at around €1.1845, down roughly 0.2% from this morning’s opening levels.
Pound (GBP) dented on UK GDP
The pound (GBP) is experiencing mild headwinds against the majority of its peers this morning following the publication of the UK’s latest GDP.
July’s data came in below market expectations this morning, and remained at 0% rather than rising to 0.2% as expected.
As the data confirmed the UK continued to stagnate in July, Sterling sentiment has soured since the start of today’s European session.
Suren Thiru, Economics Director at the Institute of Chartered Accountants in England and Wales explained:
‘These figures confirm that the UK economy struggled for momentum in the aftermath of the general election as falling manufacturing and construction output caused overall activity to flatline in July.
The UK’s growth trajectory should slow further in the coming months with higher energy bills and expected tax rises likely to trigger renewed restraint in spending and investment, despite a boost from subdued inflation.’
However, as this morning’s data release has failed to bolster Bank of England (BoE) interest rate cut bets, the Pound’s losses have remained limited’
Luke Bartholomew, Deputy Chief Economist at abrdn, commented:
‘There is no reason yet for the Bank and England to feel it needs to speed up the pace of rate cuts, and we expect the Bank to keep interest rates on hold next week.’
Euro (EUR) muted ahead of ECB rate decision
The euro (EUR) is trading largely flat against the majority of its peers this morning as investors are likely hesitant to place any aggressive bets ahead of the European Central Bank’s (ECB) upcoming interest rate decision.
Scheduled for release tomorrow afternoon, the ECB is widely anticipated to enact a 25 basis-point interest rate cut.
Following a slew of underwhelming economic data from within the Eurozone, should the ECB confirm a rate cut tomorrow, the single currency will likely slump against its counterparts.
Pound euro exchange rate forecast: ECB rate decision in the spotlight
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking ahead to tomorrow will undoubtedly be the ECB’s upcoming interest rate decision.
Will the ECB slash rates and in turn see the euro weaken? Or will a surprise interest rate hold see EUR exchange rates firm?
Turning to the pound, UK data will be in short supply and as such will likely leave Sterling rudderless and left trading without a clear trajectory.