Euro reversal against British Pound nears 0.8650 after soft Eurozone data

• EUR/GBP dips below 0.8660 on Wednesday after Tuesday's reversal at the 0.8700 area.
• Eurozone GDP and Industrial Production figures have failed to support the Euro.
• The Pound has shrugged off concerns about the fragility of the Labour cabinet.

The Euro (EUR) is showing one of the weakest performances among the G8 currencies on Wednesday, and extends its reversal against the British Pound (GBP) to levels nearing 0.8650 at the time of writing, after failing at the 0.8700 area on Tuesday. The common currency has been weighed by uninspiring Eurozone Gross Domestic Product (GDP) and Industrial Production figures, while the Pound skips concerns about the UK’s political turmoil for now.

The Eurozone’s Q1 GDP’s second estimation, released earlier on Wednesday, confirmed the advanced figures of a meagre 0.1% growth in the first three months of the year, down from 0.2% in the previous quarter. Year-on- year, the Eurozone economy grew at a  0.8% pace, according to the data, following a 1.3% upwardly revised growth in Q4.

Beyond that, Eurozone Industrial Production figures have shown a 0.2% increase in March, undershooting market expectations of a 0.3% advance, while February’s figures have been revised down to 0.2% from the previously estimated 0.4% rise. Year-on-year, factory output has accelerated its contraction, to -2.1% in March, from -0.8% in the previous month.

The Pound, on the other hand, is shrugging off concerns about the fragility of Prime Minister Keir Starmer’s Labour cabinet after the defeat in last week’s local elections. Starmer has vowed that he will remain in charge despite growing voices asking him to leave, even within his own party, and the resignations of four junior ministers on Tuesday.

The UK calendar is thin on Wednesday. The highlight of the week will be the Q1 GDP, due on Thursday. Economic growth is expected to have gathered pace in the first three months of the year, although data from March is likely to curb investors' enthusiasm, as economic activity is expected to have come to an abrupt halt amid the war in Iran.