- Pound (GBP) rises as the market mood improves
- British retailers are more upbeat
- Euro (EUR) slips despite stronger German business climate
- ECB Lagarde to speak
The Pound Euro (GBP/EUR) exchange rate is rising for a fourth straight day. The pair rose 0.12% yesterday, settling on Monday at €1.1375, after trading in a range between €1.1346 – €1.1398. At 05:45 UTC, GBP/EUR trades +0.15% at €1.1392.
The pound rose yesterday after encouraging signs from British retailers who reported their first positive sales expectations in seven months. according to a survey by the confederation of British industry expected sales balance for April rose to 9 points up from -18 in March. with the exception of September the sales expectations have been negative every month since may last year. this is an encouraging sign activity in the retail sector could be stabilising after difficult 9 months.
The Bank of England’s Andrew Bailey spoke yesterday but failed to bring anything new to the picture following the central bank’s rate hike last week.
Today attention turns to the BoE quarterly economic bulletin which could provide further clues over how policymakers are weighing up the banking sector turmoil against the need to hike rates to tame double digit inflation.
The euro slipped yesterday despite a surprise increase in German business morale. The latest German IFO business climate index unexpectedly rose to 93 in March up from 91.1 in February, defying expectations of a decline to 91. The data suggests that sentiment has improved significantly as energy prices continue falling and as business are yet to fully feel the impact to interest rate hikes.
Today there is no high impact eurozone economic data instead investors will be watching closely a speech from the European Central Bank president Christine Lagarde and from the German Bundesbank President Joachim Nagel.
When Christine Lagarde spoke last week she sounded hawkish saying that inflation is still too high and at this level warrants further interest rate hikes. More hawkish comments from Lagarde could lift the euro.