GBP/EUR: Will Eurozone Inflation Pull Euro Lower?

The pound euro (GBP/EUR) exchange rate is rising, recovering losses from yesterday.

The euro is falling after German GDP fell -0.3% QoQ in Q1, after falling -0.5% in Q4 2022. This means that Germany has fallen into a recession.

Weak household consumption and declining industrial output resulted in negative growth.

The pound is rising after UK inflation cooled by less than expected to 8.7% YoY in April down from 10.1% but higher than the 8.2% forecast.

The data piles pressure on the BoE to keep hiking interest rates. The market now expects the peak rate at 5.45%, up from 5.1% yesterday.