- BoE slowed rate at which it buys up bonds, dragging Pound (GBP) lower
- UK retail sales expected to rebound in May
- German wholesale inflation expected to improve, under pinning Euro (EUR)
- Pound Euro exchange rate (GBP/EUR) trades flat just under €1.11
The Pound is pausing for breath after tumbling versus the Euro in the previous session. The Pound Euro exchange rate settled -0.69% at €1.1091 close to the low of the day and the lowest level that the pair has traded in a week.
At 05:15 UTC, GBP/EUR is trading +0.03% at €1.1093 as investors look ahead to UK retail sales data and German producer price data.
The Pound plunged in the previous session after the Bank of England monetary policy announcement. The BoE, as expected, kept rates on hold. The central bank also increased its asset purchase programme by £100 billion, also expected. However, there was one dissenting vote from Andy Haldane, the Chief Economist at the BoE, who was not in favour of increasing purchases. This was unexpected and unnerved Pound investors.
The BoE also, unexpected slowed the pace of its bond buying programme, as it saw some signs of recovery in the British economy. Pound investors were not so convinced and the slightly more hawkish move has investors worried that the central bank is slowing support prematurely.
Today investors will look to UK retail sales. Analysts are expecting a rebound in sales of +5.7% month on month in May, up from April’s record -18.1% decline. On an annual basis, retail sales are still expected to be -17.1% on the previous year.
The Euro traded mixed versus its major peers, whilst it moved higher versus the Pound, it lost ground versus the US Dollar, amid a strong risk averse climate.
There was little on the Eurozone economic calendar to attract the attention of investors leaving the common currency to be driven by sentiment. Fears over a second wave of coronavirus infections, particularly in China is prompting a risk off trade.
Today investors will look to German producer price index (PPI). PPI measures inflation at factory gate level. Analysts are expecting a -0.3% decline month on month in May, an improvement from April’s -0.7% drop.
