EUR/GBP Holds on to Gains after ECB Rate Decision
The Euro Pound (EUR/GBP) exchange rate stabilised this morning as the Euro consolidated its recent gains on the back of yesterday’s European Central Bank (ECB) policy meeting.
At the time of writing EUR/GBP is trading in a narrow range of around 0.1%.
Euro (EUR) Consolidates Gains on Hawkish Inflation Outlook
The Euro is stabilising this morning after find considerable gains on Thursday in the wake of the ECB’s latest rate decision.
While the bank left rates unchanged, markets jump in reaction to following remarks by ECB President Mario Draghi in regards to inflation as he appeared to strike a more hawkish tone.
This confidence in inflation was further supported by long-term projections from the ECB’s Survey of Professional Forecasters this morning, which predicts that inflation will rise to 1.5% this year before reaching 1.7% in 2019.
Pound (GBP) Strengthened by Upbeat GDP Figures
At the same time the Pound has been able to stave off further losses this morning thanks to the release of the UK’s latest GDP figures.
According to data published by the Office for National Statistics (ONS) the UK’s economy grew by 0.5% in the fourth quarter.
This was the fastest pace of expansion since Q4 2016 and beat expectations that growth would have remained steady at 0.4%.
The ONS reported that the uptick in growth was mostly on the back of a solid performance by the UK’s service sector, which expanded 0.6% in the last three months, up from 0.4% in the third quarter.
However broader growth in 2017 was a little gloomier as UK economic growth slowed from 1.9% to 1.8%, the slowest pace of expansion since 2012.
Darren Morgan, head of GDP at the ONS said;
‘Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy.’
EUR/GBP Forecast: Eurozone GDP to Bolster Euro?
Looking ahead to next week the EUR/GBP exchange rate could tick higher at the start of the week with the publication of the Eurozone’s own fourth quarter GDP figures.
This could strengthen the Euro if the Eurozone’s recent upbeat data translates into an uptick in growth at the end of 2017.
Meanwhile the Pound may look to advance later on in the week with the release of the UK’s latest Manufacturing PMI, with economists forecasting that factory activity will have risen in January.