EUR/GBP weakens below 0.8350 ahead of Eurozone GDP data

• EUR/GBP softens to near 0.8325 in Friday's early European session. 
• UK economy grew by 0.1% QoQ in Q4, beating expectations after recording zero growth in the previous reading. 
• Investors await the preliminary reading of the Eurozone Q4 GDP report, which is due later on Friday. 

The EUR/GBP cross trades in negative territory for the second consecutive day around 0.8325 during the early European session on Friday. The upbeat UK Gross Domestic Product (GDP) data for the fourth quarter (Q4) provides some support to the Pound Sterling (GBP). 

The UK GDP expanded by 0.1% between October and December, surpassing forecasts of a 0.1% decline, the Office for National Statistics (ONS) showed on Thursday. In December alone, GDP rose by 0.4% MoM, compared to 0.1% expansion in November. 

BoE officials have been guiding a cautious approach to interest rate cuts as they are concerned about the persistence of inflationary pressure.  BoE Chief Economist Huw Pill said on Thursday that he "urges caution on interest rate cuts" because the long process of wrestling down inflation is not yet complete. 

On the Euro front, the potential trade war between Europe and the US could drag the shared currency lower. US President Donald Trump unveiled a roadmap on Thursday for charging reciprocal tariffs against every country that imposes duties on US imports. Nonetheless, commerce and economics officials need to study reciprocal tariffs against countries that place tariffs on US goods, and it will not be due until April 1.

Later on Friday, the preliminary reading of the Eurozone GDP for Q4 will be published. The Eurozone economy is estimated to grow 0.9% YoY in Q4. In case of a stronger-than-expected outcome, this could lift the Euro (EUR) against the GBP in the near term.