- Pound (GBP) is rising for a third consecutive session
- UK trade deals lift the mood
- Euro (EUR) is falling as GDP slows in Q2
- German GDP contracts 0.1%
The Pound-Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose 0.3% in the previous session, settling on Tuesday at €1.1561. It traded between €1.1511 and €1.1574. At 19:30, GBP/EUR trades 0.20% at €1.1587.
The pound is rising for a third straight day, boosted by news of deeper ties between the UK and Oman. The leaders of the two countries agreed on Wednesday to deepen collaborations across energy, technology, defence, and security.
The news comes after the UK nd the US agreed a trade deal framework and after President Trump came to visit the UK at the weekend.
Meanwhile, the Bank of England is expected to slow the pace at which it shrinks its holdings of government bonds at the rate decision on August 7. The central bank is expected to cut rates by 25 basis points to 4%. The BoE’s statement will assess the past year’s quantitative tightening before making a decision in September on the pace of bond sales for the coming 12 months.
The EUR is falling despite stronger-than-expected Eurozone economic growth in the second quarter of the year. According to the latest data, the eurozone economy grew 0.1% quarter on quarter in the April to June period, down from 0.6% in the first quarter, but still in the black as the economy weathers trade headwinds across the three-month period.
Delving deeper into the figures, German and Italian GDP went negative. German GDP contracted -0.1%, Italy’s GDP also contracted by -0.1%. Meanwhile, Spain’s economy 0.7% helped by strong domestic consumption and exports. Portugal also saw solid growth of 0.5%.
The eurozone economy has proved to be resilient in the face of President Trump’s trade war and the winding down of the artificially high exports in the first quarter of the year when manufacturers rushed to export to the US before trade tariffs came into force.
The EU and the US agreed a trade deal this weekend which will see a 15% trade tariff applied to EU imports into the US.
