- Pound (GBP) falls after 6 days of gains
- UK house prices fall 0.6% in April
- Euro (EUR) rises after recent losses
- Eurozone GDP rose 0.4% in Q1
The Pound-Euro (GBP/EUR) exchange rate is falling on Wednesday snapping a 6 day winning run. The pair rose 0.05% in the previous session, settling on Tuesday at €1.1774. It traded between €1.1746 and €1.1786.
The euro is rising after eurozone data showed that the region’s economy performed better than expected in the first three months of the year. According to preliminary reading, Eurozone GDP expanded by 0.4% quarter on quarter. This was ahead of the 0.2% growth expected and up from a revised 0.2% growth in the final quarter of 2024.
Germany, Europe’s largest economy, saw GDP rise 0.2% over the same period, whilst the French GDP rose 0.1% in Q1.
Continuing a recent trend, southern European and smaller economies outperformed, with Spain and Lithuania adding 0.6%. Meanwhile, Ireland, which has a high proportion of multinational companies, experienced growth of 3.2% in Q1.
Despite the stronger-than-expected growth, the ECB’s outlook is unlikely to change, given that the data precede Trump’s trade shocks. The ECB is still expected to cut rates by 25 basis points further in the June meeting.
The pound is drifting lower against the euro and the US dollar in a relatively quiet day for UK economic data. Attention was on British house prices, which fell by 0.6% in April, a steeper-than-expected decline and their largest monthly fall in over 18 months.
The month-on-month decline was the first full decline since August last year and the largest since August 2023.
The decline in property prices comes as the UK government lowered the threshold at which home buyers became eligible to pay stamp duty from April 1st. First-time buyers will now pay stamp duty on properties costing £300,000 rather than £425,000.
Data from the Bank of England earlier this month showed that lenders expected mortgage demand to ease off in the coming months.
The Bank of England is expected to cut interest rates by 25 basis points in May to 4.25%
