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

EUR/GBP rebounds from the 0.8700 handle, supported by in-line Eurozone Q4 GDP and firmer labour data.
UK growth misses expectations, keeping sentiment around the Pound mixed as BoE easing expectations linger.
Diverging policy signals from the ECB and the BoE keep the cross underpinned.

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. 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