- Pound (GBP) edges higher ahead of manufacturing PMI revision & BoE’s Bailey
- BoE’s Andy Haldane boosted the Pound yesterday
- Euro (EUR) under pressure as inflation slips
- German retail sales in in focus
The Pound Euro (GBP/EUR) exchange rate is extending gains for a second straight session. The pair settled +0.28% higher on Wednesday at €1.1660 towards the low of the day. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1663.
The Pound popped higher on Wednesday following comments from Bank of England’s Andy Haldane. The policy maker boosted sterling by saying that he expects inflation to be closer to 4% by the end of the year rather than 3%. He also warned that he doesn’t consider that inflation will be that transitory, raising the prospect of a rate hike by the central bank.
His comments came after UK GDP was downwardly revised for the first three months of the year to -1.6%, down from -1.5%. The downward revision was a bit of a surprise given that the economic growth picked up more firmly than expected in March.
Looking ahead investors will be watching UK manufacturing PMI data. The data is expected to confirm that the UK manufacturing sector expanded firmly in June at 64.2. The level 50 separates expansion from contraction.
Following on from BoE Andy Haldane’s hawkish comments, attention will today turn to BoE Governor Andrew Bailey who is due to speak.
The Euro came under pressure on Wednesday amid a stronger tone surrounding the US Dollar. The greenback surged following better than expected ADP payroll data.
Eurozone inflation printed in line analysts’ forecasts. Eurozone CPI came in at 1.9% YoY in June, down from 2% in May. This is the first time that it has dipped in 9 months due to slower growth in energy prices and the price of services. Most economists expect Eurozone inflation to continue rising over the second half of the year.
Looking ahead there is plenty of data for investors to sink their teeth into today. German retail sales are expected to reveal a 5% month on month increase as the German economy started to reopen after the third covid wave, this will be up from -5.5% in April.
Eurozone manufacturing PMI is also due to be released and European Bank President Christine Lagarde is due to speak.
