- Pound (GBP) struggles after weak GDP data
- UK growth slowing as BoE looks to raise rates.
- Euro (EUR) faces headwinds from Belarus & strong USD
- Eurozone industrial production
The Pound Euro (GBP/EUR) exchange rate is edging a few pips higher . The pair settled +0.03% higher on Thursday at €1.1674 towards the low of the day. At 05:45 UTC, GBP/EUR trades +0.06% at €1.1782. The pair is set to finish the week at approximately the same level that it started he week.
The Pound showed resilience in the previous session, despite the latest data from the Office of National Statistics showing that the economic recovery in the UK slowed sharply in the third quarter. Q3 GDP came in at 1.3%, down from 5.5% in the April to June quarter. This also missed estimates of 1.5%.
The data puts the UK economy behind other G7 nations in terms of economic recovery and in the race to return to pre-pandemic levels. Supply issues, chip shortages and weak consumer spending as retail sales fell for successive months, all contributed to slower growth.
The slowing of economic growth comes as the Bank of England refrained from hiking interest rates in its November meeting to see how the economy copes with the ending of the furlough scheme.
Today there is little for on the UK economic calendar for investors to digest.
The Euro was also struggling to capitalize on the weaker Pound. This was partly owing to the stronger U.S. dollar, which extended gains from Wednesday after a surprise jump in inflation.
Also acting as a headwind for the Euro is growing tensions between the EU and Belarus. Brussels is preparing to impose fresh sanctions on Belarus over an escalating migrant crisis at the border. However, Lukashenko responded by threatening to cut of gas to Europe. His threat comes at a time when Europe is experiencing an energy crisis, sending energy costs surging.
Looking ahead, Eurozone industrial production data is expected to reveal that production contracted at a slower pace in September compared to August. Industrial output MoM is forecast to decline -0.5%, after falling -1.6% in August.