GBP/EUR rates have dropped over the past 24 hours, following poor UK Gross Domestic Product (GDP) figures released yesterday. Figures came in worse than expected and in my opinion this is likely to halt Sterling’s momentum in the short-term. The official figure of 2.3% growth was under the anticipated 2.4% and this immediately caused the Pound’s levels to drop against the EUR.
The fallout from these figures is likely to be a negative for the Pound and will also ensure there is no UK interest rate hike before the turn of the year. GDP figures are a key barometer into the relative health of an economy and UK leaders will be disappointed to see negative reports around the UK recovery, following our recent positive run. The Pound had benefitted from a run of positive UK economic data releases but also by a weakening EUR, which has come about due to the on-going uncertainty surrounding the possible extension of the Eurozone’s current Quantitative Easing (QE) programme. However, with the ECB refusing to commit to any extension on their current stimulus measures and the weak UK GDP figures already discussed, the Pound is likely to find resistance around the current levels and I would be very surprised to see GBP/EUR rates break 1.40 again under current market conditions.
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