Lagarde's Hawkish Tone Could Boost Euro Amid Weak UK GDP Outlook
The Pound-Euro exchange rate held steady on Thursday despite another interest rate hike from the European Central Bank (ECB). The ECB increased rates by 25 basis points to 2.65%, but the move was largely expected, and subsequent Euro movement was dictated by the bank's guidance.
ECB President Christine Lagarde's remarks failed to meet hawkish expectations, leaving the single currency to soften. Meanwhile, the Pound (GBP) traded sideways as a lack of major UK economic releases left Sterling without a clear domestic catalyst.
The primary driver of movement for the Pound-Euro exchange rate this week will be Friday's publication of the UK's latest GDP figures. If the data confirms a weak start to Q3, it could weigh on Sterling, making it harder for the Bank of England (BoE) to balance controlling inflation with growth.
Lagarde is scheduled to speak again on Friday, and if she strikes a slightly more hawkish tone than her previous comments, it may lend support to the Euro. As of Thursday's close, the GBP/EUR exchange rate was trading at around €1.1640.