- Pound (GBP) holds steady as UK GDP is 0% in April
- BoE could be more likely to cut rates in August
- Euro (EUR) is steady despite an upward revision to German inflation
- Political uncertainty still weighs
The Pound Euro (GBP/EUR) exchange rate is holding steady after 30 days of gains. The pair rose 0.29% in the previous session, settling on Tuesday at €1.1857 and trading in a range between €1.1806 and €1.1882. At 13:00 UTC, GBP/EUR trades -0.01% at €1.1855.
The pound is holding steady against the euro after data show that the UK economy stalled in April.
The latest figures from the Office of National Statistics revealed that UK GDP was 0% month on month in April after rising 0.4% month on month in March. The data shows that the UK economy has lost momentum after rebounding from a recession at the end of last year.
The data comes after UK unemployment also showed a weakening labour market. Unemployment rose 4.4% to a 2.5-year high.
Signs are growing that the economy is slowing, as the Bank of England’s high interest rates put brakes on business and consumer growth.
The weakness in the economy means that the Bank of England is more likely to start cutting interest rates sooner, with the August rate cuts looking likely. However, the market isn’t fully pricing in the first rate cut until later in the year.
The euro is holding steady despite an upward revision to German inflation data. In May, the second reading of the German consumer price index was upwardly revised to 2.8% from 2.4% year on year.
The upward revision to inflation is due to higher services inflation, which rose by 3.9%, up from 3.4%.
Hotter-than-expected inflation in the eurozone’s largest economy adds to doubts over when the European Central Bank will be able to cut interest rates again.
The ECB cut rates by 25 basis points last week but refused to commit to a future path for rate cuts.
Meanwhile, the ongoing political uncertainty in France continues to weigh on the common currency. French President Macron caught the market off guard by calling for a snap election for later this month after right-wing Marine Le Pen’s party outperformed his in the European elections.
