- Pound (GBP) rises after GDP upward revision
- UK manufacturing PMI data due
- Euro (EUR) fell on war uncertainty
- Eurozone inflation data due
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight session. The pair gained 0.85% on Thursday, settling at €1.1865, after trading in a range between €1.1770 – €1.1880. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1873. The pair is set to lose 1% across the week after booking gains of 0.6% across the previous week.
The pound pushed higher in the previous session after data showed that the UK economy rebounded faster than expected in the final three months of 2022, despite Omicron spreading across the country rapidly.
According to the Office of National Statistics, GDP was 1.3% quarter on quarter in Q4, an upward revision from 1%, and it also marked a rise from the 0.9% growth in the third quarter of last year. The ONS said that economic growth was 0.1% below where it was pre-pandemic.
The upbeat data helped to boost the pound. However, the outlook is still pretty bleak given that inflation is expected to continue rising, which will inevitably hurt growth, mainly as the BoE raises interest rates.
Looking ahead, UK manufacturing PMI is expected to confirm the preliminary reading of 55.5, which is down from 58 recorded in February. The level 50 separates expansion from contraction.
The euro came under pressure amid a lack of clarity over whether there was any progress in peace talks which appeared to stall earlier in the week but could resume again today.
Data in the eurozone was mixed. While the unemployment rate in the eurozone fell to a record low of 6.8%, retail sales in Germany rose 0.3% month on month, below the 0.5% forecast.
Looking ahead, the focus will be on eurozone inflation which is forecast to rise to 6.6% year on year in March, up from 5.9% in February. High inflation could prompt the European Central Banks to raise interest rates sooner rather than later.
