- Pound (GBP)rebounds as BoE kept monetary policy unchanged
- BoE upwardly revised outlook
- Euro (EUR) rallied on USD weakness & upbeat data
- German trade balance & industrial production numbers due
The Pound Euro (GBP/EUR) exchange rate is pushing higher after steep falls in the previous session. The pair settled -0.63% lower on Thursday at €1.1506 after briefly slipping below €1.15. At 05:45 UTC, GBP/EUR trades +0.15% at €1.1525.
As expected, the Bank of England kept interest rate on hold at 0.1% and left the bond buying programme unchanged at £875 billion. Only the outgoing Chief economist Andy Haldane was in favour of reducing the bond buying programme.
Despite holding steady on monetary policy, the bank does expect a speedier recovery in the UK economy. The BoE upwardly revised its GDP for 2021 to 7.25% and to 5.75% in 2022. Inflation is now expected to reach 2.5% this year. The rapid vaccine rollout, easing of lockdown restrictions and the extension of the furlough scheme from April to September have all helped the economic recovery pick up pace.
Data supported the BoE’s assessment. The service sector PMI jumped to an almost 8 year high of 61 in April as shops and hospitality venues reopened.
Despite the good news, the Pound remained under pressure versus the stronger Euro on Thursday, rebounding today.
The Euro was supported on Thursday by a weaker US Dollar and upbeat Eurozone data data.
German factory orders rose 1.5% in March compared to February and saw demand rising for the third consecutive month. Orders jumped by 3% double expectations. This data highlights the resilience of the German manufacturing sector even as the country faced a third wave of covid.
Eurozone retail sales also rose firmly in March as the easing of lockdown restrictions saw consumers eagerly hit the shops. Retail sales rose 2.7% month on month ahead of the 1.5% forecast. This bodes well for the coming months when more restrictions will be eased.
Looking ahead the German industrial production numbers and German trade balancer could attract some attention and direct the common currency.