The EUR/GBP pair trades higher near 0.8835 in early European hours on Thursday, extending gains as the Pound Sterling (GBP) comes under pressure following disappointing United Kingdom (UK) growth figures.
UK GDP slowdown weighs on Pound
Fresh data from the Office for National Statistics (ONS) showed the UK economy grew 0.1% quarter-on-quarter (QoQ) in the third quarter (Q3), slowing from 0.3% in the previous quarter and missing expectations of a 0.2% expansion. On a yearly basis, GDP rose 1.3%, slightly below both forecasts and the prior reading of 1.4%.
The monthly GDP figure for September printed at -0.1%, worse than expectations for flat growth, highlighting the economy’s fragile momentum. The weak report reinforced concerns that slowing growth could push the Bank of England (BoE) closer to its first rate cut, likely undermining further support for the Pound.
ECB tone supports Euro sentiment
The Euro (EUR), meanwhile, remains underpinned by a cautious but steady policy tone from the European Central Bank (ECB). President Christine Lagarde recently signaled that the ECB is largely finished with rate cuts for now, emphasizing patience in assessing policy transmission.
In addition, ECB policymaker Isabel Schnabel noted “positive underlying momentum” in the euro area economy, though she warned that services inflation remains sticky and that inflation risks are “tilted slightly to the upside.” Her comments suggest policymakers may maintain a restrictive stance longer than markets anticipate, supporting the single currency.
Near-term outlook
Looking ahead, traders will focus on Eurozone Industrial Production data for September, due later Thursday, for fresh direction. A stronger-than-expected print could reinforce EUR strength and help the pair sustain its advance above 0.8800.
Technically, sustained trading above 0.8810 keeps the short-term bias positive, with the next resistance seen at 0.8830 (November high). On the downside, initial support lies around 0.8750, followed by the 21-day Simple Moving Average (SMA) near 0.8745.
