- Pound (GBP) is unchanged after GDP data
- UK Q4 GDP was 0.1% QoQ vs 0.2% forecast
- Euro (EUR) awaits its next catalyst
- Eurozone Q4 GDP is expected to confirm 0.4%
The Pound-Euro (GBP/EUR) exchange rate is unchanged after yesterday’s small gains. The pair rose 0.09% in the previous session, settling on Wednesday at €1.1480. It traded between €1.1461 and €1.1536. At 18:30 UTC on Thursday, GBP/EUR trades +0.00% higher at €1.1480.
The pound is unchanged despite weak growth in the final few months of last year.
The UK economy grew by 0.1% quarter on quarter in Q4, undershooting forecasts and ending a year of lacklustre growth.
This stagnant growth was in line with Q3 and fell short of expectations of 0.2%. On a monthly basis, GDP increased by 0.1% in December, below the 0.2% expected.
Delving deeper into the figures, the service sector was flat at 0% growth, whilst consumer spending was lukewarm at 0.2. Business investment shrank by 2.7%, marking the steepest decline since 2021.
For the year as a whole, GDP rose 1.3%, below the Bank of England’s forecast of 1.4%. The Bank of England expects GDP to grow just 0.9% this year, after downwardly revising its growth forecast from 1.2% at its meeting last week.
The data highlights the challenges the government faces in reviving the UK economy.
The euro is subdued amid a quiet economic calendar. The euro has moved sideways amid a lack of fresh catalysts to drive the currency.
Data earlier in the week highlighted an improvement in investor sentiment. Meanwhile, ECB policymakers’ comments suggest expectations that inflation in the region will return to the 2% target over the medium term, after it cooled to 1.7% year-on-year in January. The market doesn’t expect the ECB to cut interest rates again this year.
Attention now turns to the preliminary employment change for Q4 and the GDP data due on Friday. Economists expect GDP to rise 0.3% quarter on quarter in Q4, in line with the preliminary reading.
