- Pound (GBP) surged 1% across last week hitting a 2-month high
- BoE Governor Andrew Bailey reassured that the central bank still had plenty of fire power to fight the recession.
- ECB’s Philip Lane also reiterated ECB’s commitment to adjusting policy
- German inflation expected to show slight improvement in August, from July
The Pound Euro (GBP/ EUR) exchange rate is treading water that the start of the new week after soaring over 1% across the previous week. The pair settled on Friday at €1.1211, just shy of the weekly high of €1.1227 a level last seen in early June.
At 05:15 UTC, GBP/EUR trades at €1.1208 in what is expected to be a quiet session owing to a public holiday in UK.
Last week the focus for financial markets the central bankers’ virtual Jackson Hole Symposium. The Pound received a boost from Bank of England Governor Andrew Bailey when he spoke at the summit. Andrew Bailey said that the central bank still has ample ammunition to fight the coronavirus crisis. Mr Bailey sought to calm fears that those central banks with little room to cut interest rates lacked fire power to fight off a deep downturn.
Today the UK is closed for a bank holiday. Looking ahead to tomorrow investors will focus on the release of manufacturing PMI data for further clues as to the health of the recovery in the sector.
The Euro is holding steady versus its major peers at the start of the week. The European Central Bank’s Chief Economist Philip Lane also spoke at the Jackson Hole summit. He reiterated the ECB’s commitment to adjust policy as needed to get inflation back on track.
This week is a big week datawise. Today sees the release of German inflation data. Analysts are expecting inflation in the Eurozone’s largest economy to decline -0.2% month on month in August, an improvement on July’s -0.5% decline.
Rising coronavirus numbers in parts of Europe, particularly tourist destinations such as France and Spain as keeping any gains in the Euro in check. France recorded an exponential increase in covid cases with 7379 new infections being recorded. This was the highest number of new daily cases since March 31st at the height of the pandemic.
