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Will GBP/EUR Firm amid Signs of UK Economic Growth?

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Pound Euro (GBP/EUR) Exchange Rate Firms as UK Economy Avoids Recession

The Pound Euro (GBP/EUR) exchange rate is firming this morning, following news that the UK has managed to avoid a recession by growing in the first quarter. Furthermore, a cheery market mood is serving to elevate GBP against safer assets.

At the time of writing, GBP/EUR is trading at around €1.1488, a rise of roughly 0.2% from this morning’s opening rates.

How Will Markets React to The Latest GDP Data?

The Pound (GBP) could continue to see wavering trade over today’s session, following this morning’s GDP data release.

The data painted a mixed picture of the UK’s economic health. While the economy was shown to have expanded by 0.1% in the first quarter, which meant the UK has managed to swerve a recession, the wider picture is less enthusing for GBP investors.

March’s GDP posted a shock contraction of 0.3%, primarily driven by sharp declines in the UK’s services sector. The Office for National Statistics (ONS) found that car sales may have been the main weak point.

So far, the Pound is managing to claw some ground against some peers on the positivity afforded by the data. If this continues over the session, Sterling may remain elevated against its peers.

Furthermore, if the market mood remains upbeat, the Pound’s increasingly risk-sensitive nature could continue to prop it up against safer assets such as the Euro.

Will EUR Remain Limited by Minimal Data?

The Euro (EUR) may continue to trade in narrow boundaries over the rest of today’s session, as a lack of impactful data releases leaves EUR investors with little inspiration.

Similarly, with the market mood seeming upbeat the safer common currency could remain unappealing. With investors seeking riskier investment opportunities, the Euro may weaken against currencies such as the Pound.

However, European Central Bank (ECB) policymakers and members may continue to make hawkish comments. Bundesbank Chief and ECB policymaker Joachim Nagel commented that recent data releases signalled that the recent hike likely won’t be the last.

Later in the session, impactful American data could provide some impetus for the Euro. The latest consumer sentiment index is due to print, and is forecast to tick downward.

A decrease in American consumer sentiment may weigh on the US Dollar. This could benefit the Euro, as the pairing shares a negative correlation – a weakened ‘Greenback’ may bring cheer to EUR investors.

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