– Written by
David Woodsmith
STORY LINK GBP/EUR Exchange Rate Dips as Markets Question UK Growth Outlook
The Pound to Euro (GBP/EUR) exchange rate edged lower on Thursday as investors reacted to the UK’s latest GDP release.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1698, down marginally from Thursday’s opening levels.
The Pound (GBP) weakened on Thursday despite data showing the UK economy delivered another quarter of respectable growth.
Figures from the Office for National Statistics (ONS) revealed the UK economy expanded by 0.4% in the second quarter of the year.
Although growth slowed from the 0.6% recorded in the first quarter, the latest figures still left the UK on course for an annualised growth rate of around 2% during the first half of the year.
Sterling, however, struggled to attract fresh buying interest as investors questioned whether the data would be sufficient to alter expectations for future Bank of England (BoE) policy.
There was also some caution over the outlook for the second half of the year, with higher energy costs and persistent geopolitical tensions in the Gulf expected to present fresh challenges for the UK economy.
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The Euro (EUR) found modest support on Thursday following the publication of the Eurozone’s latest industrial production figures.
While Eurostat reported that factory output was unchanged in June, the result comfortably outperformed expectations for a slight decline. Investors also welcomed an upward revision to May’s figures, which showed production expanded by 0.3% rather than contracting.
The single currency’s advance remained limited, however, as a firmer US Dollar (USD) tempered demand through the pair’s strong inverse relationship.
Near-Term GBP/EUR Forecast: Eurozone Labour Data to Influence ECB Expectations?
Looking ahead, the Pound to Euro (GBP/EUR) exchange rate could remain under pressure on Friday with the release of the Eurozone’s latest employment figures.
Economists expect the report to show the bloc’s labour market remained resilient in the second quarter, a result that could reinforce expectations for another European Central Bank (ECB) interest rate increase next month.
Meanwhile, with no significant UK data due for release, Sterling is likely to take its direction from broader market sentiment and external developments.
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TAGS: Pound Euro Forecasts
