The GBP/EUR exchange rate was trading at €1.1727, down 0.2% from the start of Thursday’s session. The Pound initially received some support from positive UK economic news, with the British Chambers of Commerce upgrading its growth outlook for the UK economy. However, the Pound softened against safer currencies as market sentiment soured slightly.
The Euro managed to avoid steep losses despite a contraction in German factory orders and a decline in Eurozone retail sales. The European Central Bank cut interest rates for the first time in eight years but indicated that further rate cuts were not imminent. This hawkish stance lifted EUR exchange rates.
Looking ahead, positive German data on Friday could further boost the Euro, with expectations of a widening trade surplus and a recovery in industrial production. ECB policymaker Joachim Nagel’s speech could also support the Euro if he argues against rushing into more rate cuts.
For the Pound, UK data is sparse until Tuesday’s labor market report. A decline in UK wage growth could increase expectations for Bank of England interest rate cuts, potentially weighing on Sterling.