The pound is creeping higher against the euro this morning following the release of the UK’s latest GDP reading. According to data published by the Office for National Statistics (ONS), the UK’s final third quarter GDP reading confirmed that the economy expanded by 0.6 per cent, dispelling concerns that growth may have been downgraded. Accompanying today’s GDP figures was the UK’s latest business investment figures, which revealed investment contracted at a slightly slower pace than initially expected in Q3. On top of this, UK government borrowing was revised down from £7.9bn to £5.5bn in October, while borrowing in November rose less than initially forecast, lending further support to Sterling this morning.
At the same time the euro is struggling after France’s own GDP was unexpectedly revised down in the third quarter.
Previous estimates had placed growth at 0.4 per cent in Q3, but the final reading saw this revised down to 0.3 per cent.
While this is still stronger than the Eurozone’s average of 0.2 per cent, the drop is likely to be particularly worrying to the French government, given that growth in the fourth quarter is likely to have been adversely affected by the ‘yellow vest’ protests that have brought Paris to a standstill in recent weeks.
Coming up later today will be the release of the Eurozone’s latest consumer confidence figures, which could see the euro fall back if household sentiment continued to trend lower this month.
Looking ahead to next week however, movement in the pound euro exchange rate is likely to be limited throughout much of the session as a lull in data and the closure of the UK and European markets over the Christmas period likely leads to thin trade.
The pairing may begin to show signs of life again on Friday however, with an expected drop in German inflation in December likely to drag on the single currency, while a rise in UK mortgage approvals may potentially strengthen the pound.