- Pound (GBP) is rising after losses yesterday
- UK GDP rose 0.6% in Q2
- Euro (EUR) falls in quiet holiday trade
- Risk sentiment favours the pound over the euro
The Pound Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair fell 0.46% in the previous session, settling on Wednesday at €1.1647 and trading in a range between €1.1639 and €1.1704. At 17:00 UTC, GBP/EUR trades +0.55% at €1.1713.
The pound is pushing higher on Thursday following solid UK GDP data, which supported the view that the UK economy was recovering from weakness at the end of last year.
According to the latest data from the Office for National Statistics, the UK economy grew 0.6% in the second quarter of this year, marking only a marginal slowdown from the strong growth in the previous three months (0.7%) and in line with economists’ expectations.
Monthly GDP growth was 0% in June after 0.4% growth in May—the figure was also in line with economists’ forecasts.
The data suggests that growth remains on course and is building on a strong quarter first quarter performance.
The news will be well received by the New Labour government, as Prime Minister Keir Starmer has placed grace at the center of his economic agenda.
The data came after UK inflation data yesterday showed that inflation rose by less than expected to 2.2%, and service sector inflation, a crucial gauge for domestic price pressures, fell to 5.2% from 5.7%.
Looking ahead, UK retail sales data is due tomorrow and is expected to rise 0.5% month over month in June after falling -1.2% in May.
Meanwhile, the euro has fallen across the board amid an absence of economic data releases owing to a public holiday in the eurozone.
Risk sentiment is also undermining the euro. As risk appetite improves, demand for the pound over the euro, the riskier of the two currencies, will increase.
The eurozone’s economic calendar is set to remain light for the rest of the week, meaning that the euro will likely continue to be driven by risk sentiment.