- Pound (GBP) is rising after yesterday’s losses
- BoE sees a slightly weaker growth outlook
- Euro (EUR) is falling with no EU- US trade deal still
- EU – US trade talks continue
The Pound-Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair fell 0.23% in the previous session, settling on Tuesday at €1.1588. It traded between €1.1568 and €1.1628. At 17:30, GBP/EUR trades +0.14% at €1.1604.
The pound is rising as investors digest the Bank of England’s half-yearly Financial Stability Report. The UK central bank considers the growth outlook was a little weaker and more uncertain than it was back in November last year. However, the central bank expects the UK corporate sector to remain broadly resilient despite rising geopolitical and trade tensions.
The BOE financial stability report expects GDP growth to remain close to just over 1% however, the uptick in inflation makes the outlook uncertain. Meanwhile, UK employment is expected to rise to 5% by Q2 of 2027, up from 4.8%.
Policy makers also loosened the cap on lending to riskier borrowers after the government called on regulators to explore ways to encourage economic growth.
The euro is under pressure with the focus on Trump’s trade tariffs. Hey, you, Commission President Ursula von der Leyen said that the European Union is working closely with President Trump’s administration to reach a trade deal.
An announcement is expected within the coming days as the EU seeks a swift deal with the US.
The eurozone economic calendar was quiet today, with attention focused on an ECB speaker. EC chief economist Philip Lane said in the speech today that the recent 25 basis point cut was necessary to prevent inflation undershoots from becoming persistent. Lane highlighted the influence of falling energy prices and a stronger euro, which changed the outlook on the ECB’s latest projections. Lane also highlighted growing uncertainty over the international trade system.