UK GDP contracted 0.1% in April, missing forecasts, while German HICP inflation held at 2.7% YoY, aligning with expectations.
EUR/GBP retreated to 0.8630 in Asian trading Friday after UK GDP shrank 0.1% month-over-month in April, below the anticipated 0.1% decline. March had posted a 0.3% gain. Services output rose 0.8% over three months, matching the prior period, while industrial production stalled at 0.0% MoM and manufacturing climbed 0.4%.
Markets now price a 25-basis-point Bank of England rate hike in September, with a second increase likely before year-end. Political uncertainty around Labour Party leadership further pressured sentiment. In the Eurozone, Germany’s May HICP inflation met forecasts at 2.7% YoY, though it edged down 0.1% MoM. The ECB raised rates Thursday for the first time in nearly three years, signaling prolonged hawkishness.