Key Moments
- EUR/GBP traded below 0.8660 on Wednesday, extending Tuesday’s reversal from the 0.8700 region.
- Eurozone Q1 GDP second estimate confirmed quarterly growth of 0.1% and annual growth of 0.8%.
- Eurozone Industrial Production for March rose 0.2%, missing expectations, while annual output fell 2.1%.
Euro Under Pressure Against the Pound
The Euro (EUR) is under broad pressure on Wednesday, ranking among the weakest G8 currencies. Against the British Pound (GBP), the single currency has extended its recent decline, with EUR/GBP trading close to 0.8650 at the time of writing after failing to hold the 0.8700 area on Tuesday.
Unimpressive macroeconomic figures from the Eurozone are weighing on the Euro, while the Pound is proving resilient despite political noise in the United Kingdom.
Eurozone Growth Data Confirm Lackluster Momentum
The second estimate of Eurozone Gross Domestic Product (GDP) for the first quarter, released earlier on Wednesday, matched the earlier advance reading. Output expanded by 0.1% in Q1, easing from 0.2% growth in the previous quarter.
On an annual basis, the Eurozone economy grew 0.8% in the first quarter. This follows a 1.3% growth rate in the fourth quarter, which was revised higher.
| Indicator | Period | Latest Reading | Previous / Revision |
|---|---|---|---|
| Eurozone GDP (quarter-on-quarter) | Q1 | 0.1% | 0.2% (previous quarter) |
| Eurozone GDP (year-on-year) | Q1 | 0.8% | 1.3% (Q4, revised higher) |
| Industrial Production (month-on-month) | March | 0.2% | 0.2% in February (revised from 0.4%) |
| Industrial Production (year-on-year) | March | -2.1% | -0.8% in February |
Industrial Production Misses Expectations
Industrial Production data added to the negative tone around the Euro. Output in the Eurozone increased 0.2% in March, below market expectations of a 0.3% rise. At the same time, February’s reading was revised down to 0.2% from an initially reported 0.4% increase.
On a year-on-year basis, factory activity weakened further. Industrial Production contracted 2.1% in March, deepening from a 0.8% decline in the prior month.
Pound Holds Firm Despite UK Political Strains
The British Pound is outperforming the Euro even as investors monitor domestic political developments. Markets are largely looking past questions over the durability of Prime Minister Keir Starmer’s Labour cabinet following its setback in last week’s local elections.
Starmer has vowed that he will remain in charge despite growing voices asking him to leave, even within his own party, and the resignations of four junior ministers on Tuesday.
UK Data Calendar and Growth Outlook
The UK macroeconomic schedule is relatively light on Wednesday. The main focus for the week is the first-quarter GDP report due on Thursday. Consensus expectations point to an acceleration in economic growth in the first three months of the year.
However, incoming figures for March are anticipated to temper optimism, as economic activity is projected to have stalled abruptly amid the war in Iran.
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