- Pound (GBP) rose and rose across the week
- BoE is expected to leave rates unchanged
- Euro (EUR) fell despite stronger than forecast GDP
- ECB is expected to leave rates unchanged
The Pound-Euro (GBP/EUR) exchange rate rose yesterday after losses in the previous session. The pair fell 0.15% in the previous session, settling on Thursday at €1.1534. It traded between €1.1528 and €1.1563. At 21:30 UTC on Friday, GBP/EUR settled 0.16% higher at €1.1553. The pair booked gains of 0.1% across the week.
The pound ended the week modestly higher against the euro, even as data show signs that UK business confidence weakened in January.
According to the Lloyds business barometer, confidence is deteriorated, and executives’ view of the global economic outlook declined to its weakest level in a year
However, it’s worth noting that the survey was conducted between January 5 and January 20, when President Trump was threatening to impose tariffs on Britain and other European countries as part of his plan to acquire Greenland.
However, on a positive note, hiring plans strengthened for the first time in three months, and wage growth expectations also rose.
Attention will now turn to the Bank of England interest rate decision this week, at which the central bank is widely expected to leave interest rates unchanged on the 5th of February. BYOE cut rates by 25 basis points in December in a narrow 5 to 4 vote.
Inflation rose to 3.3% year on year in December, but the central bank expects it to ease toward the 2% target by spring as disinflation becomes more established.
Meanwhile, the euro was under pressure on Friday despite better-than-expected eurozone GDP data. Figures showed that the eurozone economy grew by 0.3% quarter on quarter in the final quarter of 2025 ahead of expectations of 0.2% and in line with 0.3% growth in Q3. On an annual basis, the economy grew of 1.3%, ahead of expectations of 1.2%.
The figures show that resilience within the eurozone economy may have been addressed despite threats from U.S. President Trump.
