Euro consolidates losses against the British Pound, following upbeat UK data

• EUR/GBP steadies around 0.8660 after retreating from the 0.8700 area earlier this week.
• UK GDP and manufacturing data beat expectations, easing concerns about the impact of the Middle East conflict.
• In the Eurozone, the focus is on ECB President Christine Lagarde's speech later in the day.

The Euro (EUR) remains practically flat around the 0.8660 area against the British Pound (GBP) on Thursday. UK Gross Domestic Product (GDP) and Manufacturing Production figures beat expectations in March, but the growing political uncertainty is keeping the pair from dropping further.

Preliminary data released by the UK Office for National Statistics on Thursday revealed that GDP growth accelerated to 0.6% in the first three months of the year, as expected, from 0.2% growth in the previous quarter. The monthly GDP, however, posted a positive surprise, with 0.3% growth in March, beating expectations of a 0.2% contraction and easing concerns about a sharp economic downturn stemming from the war in Iran.

At the same time, Manufacturing Production figures showed a sharp rebound to a 1.2% growth in March following a downwardly revised 0.2% contraction in February, and also beating expectations of another 0.2% contraction. Finally, UK services activity, as measured by the Index of Services, accelerated to a 0.8% growth in March from 0.5% in February and above the 0.6% market consensus.

In the Eurozone, Spain's Harmonized Index of Consumer Prices accelerated to a 3.5% yearly growth in April from 3.4% in March, confirming the inflationary pressures from the energy shock.

The highlight of the day, however, will be European Central Bank President Christine Lagarde’s speech in Aachen, Germany, where she might provide some clues about the timing of the bank’s next interest rate hike, with markets pricing a tightening move in June or July at the latest.

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