EUR/GBP holds positive ground above 0.8800 as UK economy slows to 0.1% in Q3

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EUR/GBP strengthens to near 0.8835 in Friday’s early European session.
UK preliminary GDP grew 0.1% QoQ in Q3 2025, weaker than expected.
Weaker UK GDP data and the ECB’s cautious stance create a tailwind for the cross.

The EUR/GBP cross gains ground to around 0.8835 during the early European session on Thursday. The Pound Sterling (GBP) weakens against the Euro (EUR) after the release of UK Gross Domestic Product (GDP) data. The Eurozone Industrial Production report for September will be published later on Thursday.

Data released by the Office for National Statistics (ONS) on Thursday showed that the UK economy grew 0.1% QoQ in the third quarter (Q3) of 2025, compared to a 0.3% growth in the second quarter. This figure came in weaker than the estimation of a 0.2% increase in the reported period.

Meanwhile, the UK GDP expanded 1.3% YoY in Q3 versus 1.4% prior. This reading was below the market consensus of 1.4%. The monthly UK GDP arrived at -0.1% in September, following 0% in August (revised from a 0.1% growth), worse than the 0% expected. The GBP attracts some sellers in an immediate reaction to the downbeat UK GDP data.

The cautious tone from the European Central Bank (ECB) might contribute to the EUR’s upside. ECB President Christine Lagarde suggested the central bank is largely finished with rate cuts. Meanwhile, ECB policymaker Isabel Schnabel said there is “positive underlying momentum” in the euro area economy but noted that services inflation remains sticky. She added that inflation risks are “tilted slightly to the upside,” emphasizing that policymakers should focus on core inflation dynamics.

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.