Pound to Euro Rate Ticks Lower following UK GDP

January 17, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro Rate Ticks Lower following UK GDP

The Pound Euro exchange rate (GBP/EUR) drifted lower on Thursday after the UK released its latest GDP reading.

At the time of writing, the GBP/EUR was trading at around €1.1857, down roughly 0.3% from Thursday’s opening levels.

On Thursday, the Pound (GBP) struggled against most of its counterparts as the UK released its latest GDP figures.

The data showed that the British economy expanded by 0.1% in November, following two months of decline.

The ONS Director of Economic Statistics, Liz McKeown, explained:

‘The economy continues to be broadly flat, having grown slightly in November following two small falls in the previous months. Construction also grew, led by new commercial developments, while production continued to decline in November with
further falls across a range of manufacturing industries and oil & gas extraction companies.’

While the numbers indicated a return to growth towards the end of the year, the pace of recovery was slower than expected, which weighed on GBP exchange rates during the European trading session.

On Thursday, the Euro (EUR) fluctuated widely, declining against several of its peers while remaining relatively stable against others.

This movement came after the release of Germany's latest consumer price index (CPI) which saw inflation in the Bloc’s largest economy increase from 2.2% to 2.6%, meeting market expectations.

Despite this, the Euro did not see a significant boost, as investors were likely waiting for the Eurozone's finalised CPI data, set to be released on Friday.

Looking ahead, the key factors likely to influence the Pound Euro exchange rate on Friday will be the release of the UK’s latest retail sales index and the Eurozone’s finalised CPI data.

For the Pound, December’s retail sales are expected to rise from 0.2% to 0.4%.

If the data meets these forecasts, it could provide a boost to GBP exchange rates.

For the Euro, the final headline and core inflation readings for December are anticipated to show slight increases.

If the data aligns with expectations, it could support the Euro by potentially reducing the likelihood of a European Central Bank (ECB) interest rate cut.

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TAGS: Pound Euro Forecasts