During the early European session on Thursday, the EUR/GBP cross continued its upward momentum, reaching 0.8455. This recovery comes after bouncing from its recent low near 0.8418, the lowest level observed since August 2022. The movement was driven by subdued economic data from the UK, which weighed on the Pound Sterling (GBP) against the Euro (EUR).
Key economic releases from the Office for National Statistics (ONS) on Wednesday highlighted a stagnation in the UK economy during April, following a 0.4% growth in March, in line with market expectations. Additionally, UK Industrial Production data for April showed a decline of 0.9% month-on-month (MoM), contrasting with a 0.2% increase in March and worse than the anticipated decrease of 0.1%. These figures contributed to the GBP’s weakness against the EUR.
Conversely, the EUR found support following a relatively hawkish stance from the European Central Bank (ECB). ECB President Christine Lagarde tempered expectations for an immediate interest rate cut in July, opting to await further economic data. This stance bolstered the EUR against major currencies, including the GBP.
Looking ahead, market participants await the Eurozone Industrial Production data for April, scheduled for release later on Thursday. Analysts expect a moderate increase of 0.2% month-on-month, down from 0.6% in March. Any indication of weakness in the Eurozone’s manufacturing sector could potentially limit further gains for the EUR/GBP cross, balancing its recent upward trajectory.
In summary, while UK economic data releases dampened the GBP’s performance, the EUR benefited from ECB’s cautious optimism, influencing the EUR/GBP exchange rate dynamics. Traders remain attentive to forthcoming economic indicators for potential shifts in sentiment and market direction.
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