EUR/GBP gathers strength to near 0.8500 on weaker UK GDP data

• EUR/GBP strengthens to near 0.8495 in Thursday's early European session, up 0.27% on the day. 
• UK GDP contracted 0.3% MoM in April, weaker than expected.
• ECB's Lagarde said the central bank is in a good position on interest rates, but hinted at a rate pause. 

The EUR/GBP cross gains momentum to around 0.8495 during the early European session on Thursday. The Pound Sterling (GBP) weakens against the Euro (EUR) after the release of UK growth numbers. The attention will shift to the speeches from the European Central Bank (ECB) policymakers, who are set to speak later on Thursday. 

Data released by the Office for National Statistics (ONS) on Thursday showed that the UK economy contracted 0.3% MoM in April, compared to an expansion of 0.2% in March. This figure came in worse than the estimation of a 0.1% decline in the reported period. 

Meanwhile, the monthly Industrial Production fell by 0.6% in April versus -0.7% prior. This reading came in below the market consensus of -0.5%. The GBP attracts some sellers in an immediate reaction to the downbeat UK GDP data. 

The weaker-than-expected UK GDP data, along with the soft UK employment data released earlier this week could increase market expectations that the Bank of England (BoE) will cut interest rates by more than investors had projected earlier. This might exert some selling pressure on the GBP in the near term. 

On the Euro front, the hawkish remarks from the ECB could lift the shared currency. ECB President Christine Lagarde said after the policy meeting that the central bank might be approaching the end of the easing cycle. Lagarde further stated over the weekend that the central bank rates are now in a "good position" despite the extremely high uncertainty being triggered by Trump's tariff threats.