- Pound (GBP) falls for a second straight day
- UK GDP rose 0.5% MoM in February
- Euro (EUR) gains against the pound and USD
- The EUR benefits from the US selloff
The Pound-Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell -1.36% in the previous session, settling on Thursday at €1.1541. It traded between €1.1540 and €1.1741. At 12:00 UTC, GBP/EUR is trading -0.25% at €1.1512. The pair is on track to lose 2.2% this week, after falling 1.5% last week.
The pound is falling despite stronger-than-expected growth in the UK economy in February. According to the latest data from the Office of National Statistics UK, Kaname grew by nought .5% month on month in February, ahead of the 0.1% growth that economists forecast. This was also up from the negative nought .1% contraction in January.
The upbeat numbers are due to a boost in manufacturing and production and a 0.3% grace in the service sector.
However, the better-than-expected figures come as the UK economy braces for the impact of tariffs imposed on goods to the US, which means the stronger growth will likely be short-lived. The UK is subject to Trump’s 10% universal tariff in goods imported to the US.
The euro is surging against the pound and dollar. It trades at its highest level since November 2023 against sterling and at its strongest level since February 2022 against the US dollar.
The euro has emerged as the currency of choice as investors sell out of the US dollar amid the escalating trade war with China.
Meanwhile, EU – U.S. trade tensions have eased after Trump paused the 20% reciprocal tariffs on the European Union earlier in the week. The EU also suspended retaliatory tariffs on the US. However, the EU is still affected by the universal tariff and the 25% tariff on autos.
ECB president Christine Lagarde is due to speak later today.
The ECB is widely expected to cut rates by 25 basis points in the April meeting next week amid downside risks to the economy.
