Pound Euro Exchange Rate on the Defensive Following ECB Rate Cut

December 13, 2024 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate on the Defensive Following ECB Rate Cut

The Pound Euro (GBP/EUR) exchange rate trended broadly lower on Thursday following the release of the European Central Bank’s (ECB) latest interest rate decision.

At the time of writing, the GBP/EUR was trading at around €1.2108, down roughly 0.3% from Thursday’s opening levels.

Euro (EUR) Firms Following ECB Rate Decision

On Thursday, the Euro (EUR) maintained its stability against most of its counterparts, even as the European Central Bank (ECB) announced its fourth interest rate cut of the year, lowering the rate from 3.25% to 3%.

Following the widely anticipated reduction, ECB President Christine Lagarde adopted a more cautious tone during the press conference, emphasizing the overall economic challenges facing the Eurozone.

Despite the rate cut and the ECB's dovish stance, the Euro managed to hold its ground and even gained against several other currencies, including the Pound (GBP).

Pound (GBP) Rangebound Amid Absence of Data

On Thursday, the Pound failed to capture much interest from investors, ticking lower against most of its counterparts largely due to the ongoing lack of economic data this week.

Investors appeared especially wary, likely bracing for key economic data set to be released on Friday.

The UK's latest GDP figures are due out on Friday, which could lead to notable volatility for the Pound at the end of the week.

GBP/EUR Exchange Rate Forecast: UK and Eurozone Data in the Spotlight

Looking ahead, the main factor influencing the Pound Euro exchange rate on Friday will likely be the release of significant economic data from both the UK and the Eurozone.

For the Pound, the UK is set to unveil its latest GDP figures for October. If the GDP numbers meet expectations and show a recovery from the previous -0.1% to an anticipated 0.1%, GBP exchange rates could receive a positive boost by the end of the week.

On the Euro side, Germany will publish its latest balance of trade data, and the Eurozone will release its October industrial production figures. Any deviation from market expectations in these indices could introduce volatility into EUR exchange rates.

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TAGS: Pound Euro Forecasts