- Pound (GBP) slips lower amid PM tax hike plans
- Boris Johnson unveiled a huge tax rise to fix the NHS
- Euro (EUR) rose after EZ GDP upward revision
- French trade data & Italian retail sales due
The Pound Euro (GBP/EUR) exchange rate is edging lower for a third straight session. The pair settled -0.1% lower in the previous session at €1.1642 after falling as low at €1.1608. At 05:45 UTC, GBP/EUR trades -0.08% at €1.1635.
The Pound came under pressure in the previous session as investors shrugged off hawkish comments from the Bank of England policy maker Michael Saunders. Mr Saunders warned that the central bank could need to raise interest rates as soon as next year if growth continues and inflation remains elevated.
Michael Saunders voted to end the £895 billion bond buying stimulus plan early in the latest BoE monetary policy meeting given his concerns over elevated inflation.
Separately concerns over Prime Minister Boris Johnson’s tax hike plan have also dragged on the value of the Pound. Boris Johnson unveiled plans to hike taxes to fix the health and social care system. As a result, Britain faces its highest ever peacetime tax burden.
There is no high impacting UK data due today. Investors will look ahead to UK GDP data due on Friday.
The Euro pushed higher versus the Pound on Tuesday despite mixed data. On the positive side Eurozone economic growth was upwardly revised for the second quarter. The third reading of GDP came in at 2.2% quarter on quarter up from 2% in the second reading.
Separately German industrial production also increased by more than forecast in July. Industrial output rose by 1%, ahead of the 0.7% rise forecast and up from the -1% decline in June. The upbeat numbers came following unexpectedly strong German factory orders.
However German ZEW consumer sentiment, which measures the level of optimism from analysts regarding the economic outlook decreased considerably. The index dropped 13.5 points to 26.5, down from 40. This marked the fourth straight monthly decline since May. The decline in sentiment comes amid rising inflation concerns and concerns surrounding global supply chain issues.
Today there is no high impacting Eurozone data. There is mid tier data with the French trade balance and Italian retail sales.