GBP/EUR Exchange Rate Rises as UK ‘Economic Growth in March is a Promising Sign of Things to Come’, says Chancellor
The Pound Euro exchange rate rose this morning after the latest UK GDP figure rebounded by 2.1% in March. But growth in the four quarter is down by 1.5%. The pairing is currently fluctuating around €1.16.
GBP has however benefited from growing confidence in the UK economy, with England set to further ease lockdown measures on 17 May.
UK Chancellor Rishi Sunak said:
‘Despite a difficult start to this year, economic growth in March is a promising sign of things to come.
‘As we cautiously reopen the economy, I will continue to take all the steps necessary to support our recovery.’
Alpesh Paleja, lead economist at the business group CBI, also commented on the data:
‘A range of indicators, including CBI business surveys, point to a rebound in activity heading into summer – with the economy opening up and pent-up demand waiting to be unleashed. But this is a recovery that will be felt more by some. Undoubtedly, hardest-hit sectors and households have a longer road ahead.’
The UK service sector also grew by 1.9% in March as retail sales continue to strengthen despite the closure of non-essential shops until April, when they could reopen.
Meanwhile, the production sector – utilities, mining and manufacturing – grew by 1.8%, with manufacturing output rising for a second month in a row at 2.1%.
All this has contributed to growing optimism in the outlook for the UK’s economy today, buoying the Pound Euro exchange rate.
Euro (EUR) Struggles Despite Rising German Inflation Data in April
The Euro (EUR) failed to rise against the Pound (GBP) today despite the release of April’s German harmonised index of consumer prices rising by 2.1%.
European stocks also opened higher today after yesterday’s sever sell-off. Germany’s DAX is up by 0.1%, while France’s CAC is down by 0.1%.
As a result, confidence in the Eurozone’s economy is steadily returning. Europe is catching up following its delay earlier this year with rolling out Covid-19 vaccinations.
Yesterday also saw the latest Eurozone Sentix investor confidence figure jump to 21.0 in May.
Manfred Huebner, Managing Director of Sentix, commented on the data:
‘The excellent economic performance is evident in all regions of the world. The overall index for the US reaches an all-time high and rises for the 13th consecutive month. The global economy is now beginning to show clear signs of overheating. This is likely to prompt central banks to slow down the momentum.’
Pound Euro Exchange Rate Outlook: Could Hopes for the UK Economy Continue to Grow This Week?
Pound (GBP) investors will be looking ahead to tomorrow’s speech from the Bank of England (BoE) Governor Andrew Bailey.
Any upbeat comments about the UK economy would be GBP-positive.
In absence of any notable Eurozone economic data until next week, the EUR/GBP exchange rate could fall if the outlook for the bloc’s economy shows any signs of deterioration.
As a result, the Pound Euro exchange rate could continue to head higher if the outlook for the UK’s economy continues to improve as the nation’s Covid-19 cases remain relatively low. Lockdown is also due to be eased in England on Monday 17 May.