EUR/GBP Strengthens Below 0.8550 After UK GDP Data Release

In the early hours of Wednesday’s European trading session, EUR/GBP remains positive, hovering near 0.8544. The cross sees a slight uptick following the UK’s release of mixed economic data. Currently, EUR/GBP is up by 0.04% for the day.

On Tuesday, the Office for National Statistics reported that the UK’s monthly Gross Domestic Product (GDP) expanded by 0.2% month-on-month (MoM) in January. This growth contrasts with the previous reading, which showed a contraction of 0.1%. The figure aligns with expectations of a 0.2% increase. However, January’s UK Industrial Production data disappointed, showing a 0.2% MoM decline compared to a 0.6% rise in December. Additionally, the UK Goods Trade Balance for January improved to GBP-14.515 billion from the prior figure of GBP-13.989 billion, beating the expected GBP-15 billion deficit.

Meanwhile, during its recent meeting, the European Central Bank (ECB) opted to maintain its current monetary policy. ECB President Christine Lagarde mentioned that discussions regarding rate cuts have commenced, but the bank will wait for further evidence and information, likely by June, before making any decisions. ECB Governing Council member Peter Kazimir echoed similar sentiments, expressing confidence in decreasing inflation but advocating for patience until June before considering interest rate adjustments. On the other hand, ECB policymaker Pierre Wunsch suggested that the ECB may need to take risks soon by implementing rate cuts despite concerns about high wage inflation and service price increases.

Looking ahead, Spain’s Consumer Price Index (CPI) is scheduled for release on Thursday, accompanied by speeches from ECB officials Elderson, Schnabel, and De Guindos. Friday, we will see the release of CPI inflation data from France and Italy. The following week, the market focus will turn to the UK’s February CPI report and the Bank of England’s (BoE) interest rate decision.

EUR/GBP