Pound to Euro Exchange Rate Falls as ECB Cuts Interest Rates

The GBP/EUR exchange rate weakened on Thursday after the European Central Bank (ECB) announced a widely expected interest rate cut. The Euro gained strength against its major counterparts, pushing the Pound to Euro exchange rate lower.

ECB Cuts Rates But Adopts Cautious Stance

The ECB reduced its key interest rate by 25 basis points, bringing it down from 2.75% to 2.5%. Despite the rate cut, ECB President Christine Lagarde struck a hawkish tone in her press conference, emphasizing a data-driven approach to future rate decisions. This cautious stance helped bolster the Euro (EUR), strengthening it against the Pound (GBP) and other currencies during the day’s trading session.

Pound Struggles Amid Lack of UK Data

Meanwhile, the British Pound (GBP) saw little movement due to a lack of major UK economic data releases. Even hawkish comments from Bank of England (BoE) Governor Andrew Bailey on Wednesday failed to provide momentum for Sterling. Despite the BoE’s firm stance on future monetary policy, the GBP exchange rate remained mostly unchanged throughout Thursday’s European trading session.

GBP/EUR Exchange Rate Forecast: Eurozone GDP and Employment Data in Focus

Looking ahead, the GBP/EUR exchange rate will likely be influenced by economic data from the Eurozone on Friday. The bloc is set to release its latest GDP estimate for the final quarter of last year, along with its latest employment change figures.

Both indicators are expected to decline, which could put pressure on the Euro (EUR) and provide some relief for the Pound to Euro exchange rate as the trading week concludes.

For the British Pound, the lack of key domestic data means that GBP exchange rates may continue to trade without a clear direction.

Key Takeaways:

• ECB cuts interest rates by 25 basis points to 2.5%.
• Euro strengthens as Christine Lagarde signals a cautious approach to further rate cuts.
• Pound remains flat despite BoE’s hawkish stance.
• Eurozone GDP and employment data could impact GBP/EUR exchange rate movement.

Traders will be closely watching Friday’s economic releases for further insights into the Pound to Euro exchange rate forecast as the week comes to an end.