The Pound Euro (GBP/EUR) exchange rate took a hit on Thursday following the Bank of England’s (BoE) latest interest rate decision. At the time of writing, GBP/EUR was trading around €1.1954, marking a decline of approximately 0.5% from the day’s opening rate.
Pound (GBP) Weakens as BoE Delivers Dovish Rate Cut
The British Pound (GBP) depreciated sharply against most major currencies after the BoE announced a widely anticipated interest rate cut from 4.75% to 4.5%.
Despite the expected move, the BoE’s dovish voting split and forward guidance fueled increased market speculation about future rate cuts. This sentiment led to heightened selling pressure on Sterling, causing it to weaken throughout Thursday’s European session.
Euro (EUR) Reacts to Mixed Eurozone Data
Meanwhile, the Euro (EUR) saw fluctuating performance following the release of mixed economic data.
Germany, the Eurozone’s largest economy, reported a significant rise in factory orders for December, surging from -5.2% to 6.9%, far exceeding market forecasts. However, the Eurozone’s retail sales index underperformed, coming in at -0.2% instead of the predicted -0.1%, limiting the Euro’s upside potential.
What’s Next for the GBP/EUR Exchange Rate?
Looking ahead, the key drivers for the Pound Euro exchange rate on Friday will be upcoming economic data releases from the Eurozone.
Germany is set to publish its latest industrial production figures and trade balance data. If both reports show a decline, as expected, the Euro may struggle against its major peers by the end of the week.
For the Pound, the absence of UK economic data on Friday could leave GBP exchange rates without a clear direction, potentially keeping GBP/EUR under pressure. Forex traders will closely monitor broader market trends and investor sentiment for further movement in the exchange rate.
