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Euro gains 0.3% against pound, most since December

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UK GDP growth stalls, impacting investor confidence

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Options traders bullish on euro against pound since

September

By Amanda Cooper

LONDON, Feb 13 (Reuters) - The pound headed for its

biggest weekly loss in over two months against the euro on

Friday ​after a turbulent week in British politics and in

financial ‌markets, which have been gripped by worries about the

long-term impact of artificial intelligence.

The euro, which has flat-lined against the ⁠dollar this week,

is heading for a gain of 0.3% against the pound, the

most since ⁠early December. It was last down 0.12% at 87.05

pence. The pound ‌was steady at $1.362, ‌set for a flat

performance against the U.S. currency for the week.

The pound, UK bonds and stocks all suffered earlier ​in the

week when a political crisis sparked by ‌the Epstein affair

seemed to threaten Prime Minister Keir Starmer's hold on power.

However, the selling pressure subsided after the cabinet

rallied behind Starmer and he pledged ​never to walk away from

his position.

In a ​further setback ‌for investor confidence, UK gross

domestic product data on Thursday showed that the economy almost

ground to a halt in the final three months of 2025.

This did not ⁠shift market expectations that the Bank of

England will deliver no more than two ⁠rate cuts this year, given

policymakers' concern about persistent inflationary pressures.

"Q4 UK GDP disappointed, with the economy growing just 0.1%

quarter-on-quarter in the final three months of last year,

unchanged from the pace seen in Q3," Pepperstone senior research

strategist Michael Brown said.

"Not only is this meagre pace ⁠not worth ‌celebrating at all -

despite some in Westminster popping the champagne post-release -

it must ‌also be set in the context of an economy that has grown

at a quarterly clip ⁠over 0.5% in just 3 of the last 15 quarters,

but also one where risks to the outlook continue to tilt firmly

to the downside," he said.

Options traders this week have reached their most bullish

view on the euro against the pound since September.

Risk reversals, which reflect the difference between the

cost of an option to buy the euro against the pound and the cost

to sell it, reached a ​peak of 78.8 basis points on Tuesday, the

most since late September. The higher this number, the more

positive traders are towards the euro, and vice versa.

Three-month risk reversals for euro/sterling ​were last at 63

bps, up four bps ‌in the last week, according to LSEG data.