- Pound (GBP) falls for a fifth straight day
- GDP was 0% QoQ
- Euro (EUR) rises after hawkish ECB commentary
- No eurozone data is due today
The Pound Euro (GBP/EUR) exchange rate is falling for a fifth straight session. The pair fell -0.16% in the previous session, settling on Thursday at €1.1452 and trading in a range between €1.1451 – €1.1504. At 09:00 UTC, GBP/EUR trades -0.05% at €1.1447. The pair is set to fall -0.7% across the week.
The pound is fooling after the UK economy stagnated in the third quarter, fueling bets that the UK economy is facing a prolonged of stalled growth.
B According to the Office of National Statistics, the GDP remained unchanged in Q3 at 0%, down from 0.2% growth in the second quarter of the year. However, this was still above forecasts of a 0.1% contraction. Household spending, business investment, and government spending dropped in Q3, whilst the economy was supported by stronger trade.
The data comes after the Bank of England downwardly revised its growth forecasts for the UK economy at the November meeting.
The central bank predicts growth of 0.1% in the final quarter of the year and GDP to flatline throughout 2024. However, some economists consider this to be rather optimistic, given the lag time between interest rates being hiked and the impact being felt in the real economy.
The figures could encourage Bank of England policymakers to leave interest rates unchanged at their current level of 5.25%Bank of England governor and chief economist Huw Pill spoke this week, and both supported the view that rates need to remain high for an extended period of time in order to rate inflation back to the 2% target level.
The market is expecting the Bank of England to start cutting interest rates from August next year.
The euro is pushing higher against the pound on the US dollar as investors weigh up further commentary from ECB policymakers.
ECB Vice President Luis de Guindos noted that the eurozone’s economy was likely to slip into a small recession at the end of the year or, at best stagnate. He also emphasised the ECB’s focus on a data-dependent approach.
Meanwhile, Robert Holzman another policy maker, cautioned over inflation and said that the central bank remained ready to raise rates if necessary.
There is no high-impacting eurozone economic data due to be released today sentiment is likely to influence the band.
