- Pound (GBP) loses momentum after stellar Q1
- BoE hawk Haldane to step down
- Euro (EUR) supported by weaker USD
- German CPI data due
The Pound Euro (GBP/EUR) exchange rate is holding steady on Thursday. The pair settled 0.05% lower on Wednesday at €1.1500 at the low of the day. At 05:15 UTC, GBP/EUR trades two pips lower at €1.1498 in quiet trade.
After 5% gains versus the Euro in the first quarter of the year, the Pound has lost momentum. Some of the economic advantages that were anticipated over the quick vaccine rollout compared to its European peers are narrowing, especially as the covid vaccine rollout picks up on the continent. Much of the good news surrounding the vaccine rollout and recovering economy has been priced in.
Recent data revealed that the UK economy expanded 0.4% in February, after tumbling 10% in 2020. This year the UK GDP is expected to expand by around 5% according to economists polled by Bloomberg.
News that the Bank of England’s Chief Economist Andy Haldane would be leaving the bank could contribute to a damper tone surrounding the Pound. Haldane has proven to be more hawkish than some of his colleagues.
Today, there is no high impacting UK data for investors to focus on so sentiment is likely to be a key driver.
The Euro found support in the previous session from a weaker US Dollar. Euro investors shrugged off a dovish speech by European Central Bank President Christine Lagarde. The ECB Chief said that the EU was still clearly dealing with a pandemic crisis and reiterated that support was needed well into the recovery.
Data in the previous session was also unsupportive. Industrial production figures revealed that factory output tumbled by more than expected in February, compared to the previous year, suggesting that he recovery was far from gaining traction. Industrial production from the bloc declined -1.6% in February, down from 0.1% in January and below the -0.9% decline forecast.
Today German inflation data will be under the spotlight. Analysts are expecting a confirmation of the preliminary figure of 1.7%year on year. A stronger than forecast reading could boost the common currency. Signs of weakness, on the other hand could weigh on demand for the Euro.