GBP/EUR Exchange Rate Forecast: Pound Euro Mixed on Latest UK GDP Data

September 10, 2021 - Written by John Cameron

STORY LINK GBP/EUR Exchange Rate Forecast: Pound Euro Mixed on Latest UK GDP Data

The Pound Euro (GBP/EUR) exchange rate is mixed this morning as the latest GDP figures from the UK support the appeal of Sterling.

At the time of writing the GBP/EUR pairing are trading around the 1.1711 level as the Euro also finds strength on the back of German inflation rate data.

Pound (GBP) Exchange Rate Mixed on UK GDP Figures

The Pound has found itself mixed against the Euro this morning as the latest GDP figures from the UK showed a slowdown in growth in the economy during July.

The GDP figures have shown that growth in the UK economy slowed to 0.1%, the slowest pace seen since the start of 2021.

Rishi Sunak, Chancellor of the Exchequer, commented on the GDP figures, saying:

‘Our recovery is well underway thanks to the success of the vaccination rollout and the roadmap, with more employees on payrolls that at any point since last March. I am confident that – supported by our Plan for Jobs – we’ll continue to recover from the pandemic, we’ll see more new jobs, and we will Build Back Better.’

Ed Monk, associate director at Fidelity International was more cautious surrounding the UK’s economic recovery moving forward:

‘What’s concerning is that these numbers may not yet be showing the full effect of sustained supply-chain bottlenecks. The problem spans multiple sectors, with concerns growing over shortages in manufacturing and construction materials, as prices of concrete, aluminium, steel, timber, and fuel continue to rise.’

‘Speaking to MPs on the commons Treasury committee this week, Andrew Bailey confirmed supply-chain issues and a shortage of workers could see a ‘levelling off of the recovery’.

Euro (EUR) Exchange Rate Supported by Weakening US Dollar

The Euro has found strength against the Pound this morning as a weakening US Dollar bolsters the appeal of the single currency.

More so, a rise in German inflation rate figures also allowed EUR to push higher across the board.

German consumer prices rose to 3.9% on the year during August, in line with market expectations and the highest level seen since 1993.

Christoph-Martin Mai, head of the Consumer Prices department at the Federal Statistical Office commented on the rise, saying:

‘The temporary reduction in VAT rates and the fall in the price of petroleum products in 2020 will have an increasing effect on overall inflation until the end of 2021 compared to the previous year . Added to this are the introduction of Co2 pricing since January 2021 as well as effects caused by the crisis, such as the significant price increases on the upstream economic levels, which so far have only been partially reflected in the consumer price index.’

GBP to EUR Exchange Rate Outlook: UK Employment Data in Focus

For Pound investors, heading into next week the latest employment data from the UK for August will be eyed by investors to drive movement in GBP exchange rates.

Euro traders will be looking towards Eurozone industrial production figures to support the appeal of the single currency next week.

The GBP/EUR exchange rate will continue to be driven by any further coronavirus developments in the coming days as the delta variant of the virus continues to cause concern globally.

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TAGS: Pound Euro Forecasts