Pound/Euro higher after strong UK GDP growth

GBP/EUR up on UK GDP figures

Sterling/Euro has recovered its losses from the last few days, rising back to €1.12. The reason for the gain was this morning’s UK GDP figures which came in above forecast at 0.4% for the quarter. The better figures show again how the UK economy is resilient to the Brexit uncertainty. It also means there is more chance of an interest rate hike again next month, but the actual decision will probably be a fine line.

If ECB announce tapering, GBP/EUR could come under pressure

We now look ahead to tomorrow’s ECB decision and any possible hints that they will be ending their stimulus measures. If they do, expect the Euro to strengthen pulling Pound/Euro rates back down again. If however they continue with their QE measures the GBP/EUR rates may be supported.

Developments in Catalonia could push GBP/EUR higher

The other thing that could affect Pound/Euro rates in the short term are any developments from Catalonia. The regional government there are due to set out some kind of response to the Spanish invocation of Article 155 which allows it to suspend Catalonia’s political autonomy. How they decide to respond to this could affect GBP/EUR rates.  If tensions increase or if they decide to make a declaration of independence, then I think the Euro would weaken which could push GBP/EUR rates back towards €1.13 again. 

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