GBP/EUR: the pair rises after six days of losses
- The pound (GBP) struggled amid doubts over the BoE’s next move
- Today, UK public sector net borrowing data is due
- The Euro (EUR) Gained After Stronger Than Expected IFO Activity Sentiment
- There is no EZ data due today
The British Pound (GBP/EUR) exchange rate is rising, ending a six-day losing streak. The pair settled -0.01% lower on Monday at €1.1890 after trading in a range between €1.1871 and €1.1909. As of 05:45 UTC, GBP/EUR is trading +0.05% at €1.1897.
During the previous session, the pound came under pressure amid risk aversion in the market and as investors reduced their bets on the Bank of England’s monetary policy tightening. Markets are currently pricing in rates up 1.5% by the end of the year, with a rate hike of more than 0.25% expected at the May meeting next week. However, the BoE warned of a potential recession in the coming months and a slowdown in the labor market.
Data today revealed that British manufacturers’ optimism in the three months to January fell at its fastest rate since the start of the pandemic, with prices rising and orders slowing. According to the Confederation of British Industry, confidence plunged to -34%, from -9%. The data adds to evidence that suggests Britain’s economy is beginning to falter.
Going forward, public sector net borrowing will be the focus.
The Euro managed to gain against the Pound yesterday, but fell against the stronger US Dollar.
The common currency found support from Macron’s victory in the French election and German IFO business sentiment data stronger than expected. The data suggests that companies have become more optimistic after the initial blow of the Russian war.
The IFO index unexpectedly rose to 91.8 in April from 90.8 in March and well ahead of the forecast of 89.1. The rise in optimism still seems a little premature given that the war continues and commodity prices continue to rise.
Today, the Eurozone economic calendar is quiet before things start to pick up speed towards the end of the week with inflation and GDP data from Germany and the Eurozone.