- Pound (GBP) steady in quiet holiday trade
- Supply chain issues could slow economic recovery
- Euro (EUR) came under pressure last week on weak German data
- German inflation & Eurozone sentiment data in focus
The Pound Euro (GBP/EUR) exchange rate is edging lower at the start of the week in quiet, holiday thin trade after booking mild gains across the previous week. The pair rose 0.15% last week settling at €1.1661, after briefly spiking above €1.17. At 08:45 UTC, GBP/EUR trades -0.03% at €1.1658.
The Pound managed to creep higher across the previous week but is seeing any gains capped amid ongoing supply chain issues. UK food producers were initially hit by labour shortages from “Pingdom” – when large numbers of people were being told by the National Health Service app to self-isolate owing to a covid contact.
Since then, supply chain interruptions have come from a shortage in truck drivers following Brexit. The UK government has rejected calls from retail and logistics companies to temporarily change visa requirements for truck drivers to ease to the disruption. There are growing concerns that supply chain issues could slow the economic recovery.
There is no high impacting data due today and trading is expected to be quiet owing to the UK bank holiday.
Looking ahead across the week the UK economic calendar is quiet with just the final manufacturing and service PMIs for August.
The Euro came under pressure in the previous week following a string of disappointing data from Germany. German consumer and business sentiment both booked a larger deterioration than forecast. Meanwhile the German manufacturing PMI also showed a larger slowdown that expected slowdown in activity a supply chain issues also impacted the German activity.
Increasing prices for materials and shortages for key components such as semiconductors has disrupted operations. Last week German car manufacturer Volkswagen warned that it was limiting production at its main factory in Wolfsburg due to chip shortages.
Today the focus is back on the economic calendar with the release of Eurozone economic confidence data and German inflation figures for August. CPI inflation is expected to tick higher on an annual basis to 3.9%. However on a monthly basis it is expected to slow to 0.1% down from 0,9%