- Pound (GBP) holds steady after CPI driven losses on Wednesday
- BoE’s Andrew Bailey to speak
- Euro (EUR) trades mixed amid vaccine chaos & upbeat data
- Economic Bulletin & Christine Lagarde speech in focus
The Pound Euro (GBP/EUR) exchange rate is treading water on Thursday after selling off across the week. The pair settled -0.18% lower on Wednesday at €1.1582 after retesting the two-week low at €1.1560. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1583.
The Pound extended losses for a fourth straight session on Wednesday as disappointing inflation data overshadowed better than expected PMI figures.
UK inflation, as measured by the consumer price index, rose 0.1% in February compared to the month earlier, this was an improvement from the -0.2% decline in January. However, it was significantly less that the 0.5% forecast. On an annual basis, CPI printed at just 0.4%, down from 0.7% in January and 50% short of the 0.8% expected. The weak reading came as clothing was heavily discounted, dragging the Pound lower.
Not even upbeat PMI data was sufficient to lift the Pound out of the red on Wednesday. Data from IHS/Markit revealed that UK business activity roared back to life in March, boosted by stronger consumer confidence ahead of the reopening of the economy after lockdown.
The preliminary reading for the composite PMI jumped to 56.6 in March, up from 49.6 last month. The level 50 separates expansion from contraction.
After a busy week, the UK economic calendar is quiet today. Bank of England Governor Andrew Bailey is due to speak which could drive movement in the Pound.
The Euro traded mixed versus its peers, advancing versus the Pound, but falling versus the stronger US Dollar.
Data was supportive of the Euro, however, the ongoing vaccine chaos in the block is unnerving investors. The European Commission has published new proposals to widen criteria for restricting vaccine exports in an attempt to boost its vaccine programme.
Meanwhile data revealed that business activity in the bloc bounced back into expansion, thanks to surging activity in the manufacturing sector which hit a 40 month high.
Eurozone data is in relatively short supply today with the ECB economic bulletin and a speech by European Central Bank President Christine Lagarde expected to drive movement.