- Pound (GBP) remains underpinned by last week’s hawkish BoE
- UK Q2 GDP data due tomorrow
- Euro (EUR) edged lower after a sharp drop in German economic sentiment data
- No high impacting Eurozone data due
The Pound Euro (GBP/EUR) exchange rate is ticking lower on Thursday after booking mild gains in the previous session. The pair settled +0.05% higher on Wednesday at €1.1815, hovering around an 18-month high. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1809.
The Euro traded roughly flat amid a weaker US Dollar and as German inflation soared to its highest level in almost 30 years. German consumer prices jumped to 3.8% year on year in July, up from 2.3% in June.
Energy prices surging 11.6% and a temporary VAT reduction in July – December last year played a key role in driving up the CPI level. However, these factors are considered to be temporary and unlikely to pressurize the European Central Bank to tighten monetary policy. As a result, the Euro regained losses.
The ECB remains accommodative in its stance. However, this is in contrast to the Bank of England last week which adopted a more hawkish tone supported sterling to an 18-month high versus the Euro this week.
The UK economic calendar was quiet in the previous session, keeping the Pound relatively subdued and trading within a familiar range.
Attention is now firmly on the UK GDP data due today UK economy is expected to have grown 4.3% in the three months to June, this would mark a signififcsntly recovery from the -1.6% decline recorded in the first three months of the year. As lockdown restrictions eased and the economy reopened, growth is expected to have rebounded. PMI data across the second quarter has been upbeat with services hitting a record high in June.
A strong reading could help raise optimism surrounding the health of the UK economy and Bank of England rate hike expectations. This would likely boost the Pound.
There is no high impacting Eurozone data due to be released today.
