EUR/GBP settles below 7-week high, posts weekly gain

The EUR/GBP currency pair settled below recent high of 0.8546, its strongest level since April 25th.

The Sterling continued to underperform after the publication of lackluster UK employment data and weak GDP growth for April, which fueled speculation of further interest rate cuts by the Bank of England by year-end.

The UK economy shrank at a monthly rate of 0.3% in April, marking the first contraction in six months and the sharpest one since October 2023.

The downturn was mostly contributed to by higher energy bills and regulated service costs, the implementation of increased employers’ National Insurance contributions, higher Stamp Duty Land Tax rates and the announcement of sweeping US tariffs.

In annual terms, the UK economy expanded 0.9% in April – the slowest growth rate in ten months.

According to Danske Bank analyst Kirstine Kundby-Nielsen, the Pound may depreciate even if the Bank of England remains cautious on future rate cuts.

Meanwhile, recent commentary by European Central Bank officials signaled that the current phase of monetary easing might be approaching its end. This served to provide additional support to the Euro, while the diverging central bank outlooks have added to the EUR/GBP pair’s upward bias.

The EUR/GBP currency pair settled with no change at 0.8504 on Friday.

The minor Forex pair gained 1.03% for the week.