GBP/EUR: Will UK GDP Data Lift Pound vs. Euro For A Second Session?
  • Pound (GBP) set to fall 1% this week
  • UK GDP to contract -0.2% MoM in November
  • Euro (EUR) rises as recession fears ease
  • German GDP to rise 1.8% in 2022

The Pound Euro (GBP/EUR) exchange rate is falling for a fifth straight session. The pair fell -0.32% yesterday, settling on Thursday at €1.1240, after trading in a range between €1.1215 – €1.1324. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1244. The pair is set to lose 1% across the week.

The pound fell in the previous session as investors weighed up retailers’ results, which showed that consumers spent well over the Christmas period against signs that the economy was slowing.

Tesco and Marks & Spencer, the largest supermarkets in the UK reported strong sales over the festive period indicating that consumers were spending freely despite the ongoing cost of living crisis. Management at the companies warned tht they expect a much tougher trading environment in 2023.

With inflation still high and interest rates rising, the squeeze on households is set to continue and is expected to tip the UK economy into recession. Investment Bank Nomura warned that as a result, house prices would likely fall by as much as 15% this year.

Looking ahead UK GDP data will be in focus. Expectations are for the UK economy to have contracted -0.2% month on month in November, after rising 0.5% in October. On a three months basis to November, GDP is expected to fall -0.4%, after falling -0.1% in the three months to October. The data points to the UK economy contracting in Q4.

The euro has risen this week, lifted higher by hawkish ECB comments and expectations of a milder recession. Goldman Sachs said earlier this week that it no longer expects a recession in the eurozone in 2023.

Today attention is back on the eurozone economic calendar with the release of German full year 2022 GDP. Analysts are expecting growth to have slowed to 1.8% from 2.6% in 2021.

Eurozone industrial production data will also be released and is expected to