British Pound to Euro (GBP/EUR) Exchange Rate Rallies
The British Pound recovered from Wednesday’s losses against the Euro after the single currency fell following weaker-than-forecast Eurozone GDP data.
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Data released in the morning showed that the Eurozone economy expanded less than expected in the first quarter of the year, piling extra pressure onto the European Central Bank to introduce new monetary easing measures at June’s policy meeting.
According to Eurostat the 18-member Eurozone saw GDP expanded by just 0.2%, a figure half of what economists had been predicting.
Germany was the leading star as per usual with its economy expanding by 0.85 in the first quarter.
But despite the positive rise, the data enough to offset dismal reports from elsewhere.
Portugal saw GDP contract by 0.7%, France saw its economy stagnate, Italy contracted unexpectedly, Finland slipped back into recession, Greece shrank again and the Netherlands saw a shocking contraction of 1.4%.
“Today’s figure is a major disappointment, as it suggests that the Eurozone is still far away from reaching the escape velocity required for a sustainable recovery,” said Peter Vanden Houte the chief Eurozone economist at ING.
The Euro came under further pressure after the International Monetary Fund questioned the feasibility of the French government’s economic plans.
“Achieving the deficit objectives while delivering on the tax cut commitments leave no room to deviate from the announced expenditure reductions. The major risks are that the initial plans may be diluted in sequential annual budgets and that cuts in transfers to local governments may be compensated by unsustainable cuts in investment, higher taxes or higher debt,” the IMF warned.
Against the US Dollar the British Pound recovered from earlier session lows but remains close to a one-month low.
The British Pound is currently trading against the Euro in the region of 1.2267 and trading against the US Dollar in the region of 1.6763