EUR/GBP Bounces From Daily Lows as Eurozone GDP Supports the Euro

Why It Matters

The contrasting growth figures bolster a steady‑hand ECB while keeping the pound under pressure, creating a clear upside bias for the euro against the pound.

Key Takeaways

• Eurozone Q4 GDP +0.3% QoQ matches forecasts.
• UK Q4 GDP +0.1% QoQ misses expectations.
• EUR/GBP rebounds above 0.8700 level.
• ECB likely to hold rates steady.
• Risk reversals hit 78.8 bps, favoring Euro.

Pulse Analysis

The latest Eurostat release showing a 0.3 % quarter‑on‑quarter expansion in Q4 2025 provides the Eurozone with a modest but reassuring growth signal. While the annual increase of 1.4 % nudged above consensus, the data still sits comfortably within the ECB’s inflation‑targeting framework. In contrast, the United Kingdom’s Office for National Statistics reported a tepid 0.1 % QoQ rise, falling short of the 0.2 % forecast and dragging annual growth to 1 %. These divergent trajectories have immediately filtered into the foreign‑exchange market, lifting the EUR/GBP pair from its intraday lows.

From a monetary‑policy perspective, the numbers reinforce the European Central Bank’s current stance of rate patience. Governing Council member Gabriel Makhlouf’s recent comments that inflation is ‘basically on target’ echo the view that the ECB can maintain its restrictive setting without further tightening. Meanwhile, Bank of England chief economist Huw Pill signalled a continued restrictive posture, citing underlying inflation near 2.5 % and suggesting that holding rates steady is sufficient. The policy divergence—steady ECB versus a still‑cautious BoE—creates a relative yield advantage for the euro, supporting its appreciation against the pound.

Technical indicators corroborate the fundamental bias. The EUR/GBP cross has reclaimed the psychologically important 0.8700 threshold, trading near 0.8717, while risk‑reversal spreads surged to 78.8 basis points, the highest level since September. Such a widening reflects market participants’ willingness to pay a premium for long‑Euro positions, indicating bullish sentiment. If the euro continues to benefit from solid growth data and a stable ECB policy while the pound remains constrained by weaker UK output and dovish BoE expectations, the pair could test the 0.8800 resistance in the coming weeks.

EUR/GBP bounces from daily lows as Eurozone GDP supports the Euro

02/13/2026 13:31:04 GMT · EUR/GBP bounces from daily lows as Eurozone GDP supports the Euro · Vishal Chaturvedi · FXStreet

EUR/GBP rebounds from earlier daily lows on Friday, with the Euro (EUR) drawing modest support from preliminary Eurozone Gross Domestic Product (GDP) data that showed the economy growing in line with expectations in the fourth quarter of 2025. At the time of writing, the cross trades around 0.8717, after bouncing from the 0.8700 psychological level.

Data released by Eurostat showed that the Eurozone economy expanded by 0.3 % QoQ, matching both market expectations and the previous estimate. On an annual basis, GDP rose 1.4 % in Q4, slightly above the 1.3 % forecast.

The labour market also showed steady momentum, with Employment Change holding at 0.2 % QoQ in the fourth quarter, above the 0.1 % forecast, while annual employment growth held at 0.6 %, in line with expectations.

The data also supports the case for the European Central Bank (ECB) to keep policy unchanged. Speaking on Thursday, ECB Governing Council member Gabriel Makhlouf said that inflation is “basically on target” and that the central bank is in a good place on policy.

In the United Kingdom, data released on Thursday by the Office for National Statistics showed that the economy grew by 0.1 % QoQ in the fourth quarter, missing expectations for a 0.2 % rise. On a yearly basis, GDP growth slowed to 1 % in Q4, down from 1.2 % previously.

The softer UK data keeps sentiment around the British Pound (GBP) mixed, while dovish Bank of England (BoE) expectations and a steady ECB stance persist. BoE chief economist Huw Pill said on Friday that policy should focus on underlying inflation, adding that it currently looks closer to 2.5 % rather than 2 %. He said the monetary‑policy stance remains restrictive and that holding rates at current levels, rather than raising them further, should be enough to bring inflation under control.

Adding to the supportive tone, risk reversals – which show the difference between the cost of buying the Euro against the Pound and selling it – rose to 78.8 basis points on Tuesday, the highest level since late September, signalling a stronger positive bias toward the Euro, Reuters reported earlier on Friday.