The Euro remained little changed against the Pound Sterling on Friday, with the EUR/GBP pair trading around 0.8543 and extending its sideways pattern observed throughout the week. This muted movement comes as traders showed limited reaction to the release of second-quarter Gross Domestic Product (GDP) data from both the Eurozone and the United Kingdom (UK) [1].
Eurostat’s second estimate confirmed that the Eurozone economy expanded by 0.4% in the second quarter, matching the flash reading and improving from zero growth in the previous quarter. On an annual basis, Eurozone GDP growth accelerated to 1.0%, up from an upwardly revised 0.5% [1]. In the UK, GDP also grew by 0.4% in the second quarter, in line with forecasts but slowing from 0.6% in the first quarter. The UK's annual growth improved to 1.2% from 0.9%, surpassing the 1.1% estimate [1].
Despite these data releases, the EUR/GBP pair is on track to end the week in negative territory, with profit-taking likely weighing on the cross after three consecutive weekly gains. Market participants remain focused on elevated oil prices and their potential impact on inflation and the monetary policy outlook for both the European Central Bank (ECB) and the Bank of England (BoE) [1].
Markets are fully pricing in a September interest rate hike from the ECB, which would be its second increase this year. Analysts at Nordea expect three more 25 basis point hikes, taking the deposit rate to 3%, but have revised their forecast from consecutive to quarterly moves, now projecting hikes in September, December, and March 2027. Nordea also notes that geopolitical developments, particularly in the Middle East, could significantly influence the ECB's rate path [1].
The BoE is expected to keep interest rates unchanged, as the pass-through from higher energy prices remains limited. The upcoming UK Consumer Price Index (CPI) report, scheduled for release on Wednesday, August 19, 2026, will provide further insight into inflation trends [1].
CONCLUSION
Both the Euro and Pound Sterling showed limited movement despite the release of key GDP data, as markets remain focused on central bank policy outlooks and inflation risks. The ECB is expected to continue its tightening cycle, while the BoE is likely to hold rates steady pending further inflation data. Market sentiment remains cautious, with attention turning to upcoming economic releases and geopolitical developments.