- Pound (GBP) extends gains after a hawkish Andre Bailey
- UK GDP growth slows
- Euro (EUR) slips despite ECB tapering bond purchases
- The move was broadly expected
The Pound Euro (GBP/EUR) exchange rate is rising higher on Friday for a third straight session. The pair settled +0.4% higher in the previous session at €1.1698. At 08:45 UTC, GBP/EUR trades +0.2% at €1.1720. The pair is set to book mild gains in the region of +0.4% across the week.
The Pound continues to surge higher following hawkish comments from Bank of England Andrew Bailey yesterday. The BoE Governor confirmed that he believed that the minimum conditions had been reached for considering an interest rate hike. He added cautiously that the conditions were not yet sufficient to justify a hike. Even so, the upbeat comments suggested that the UK economy was close to a stimulus reduction.
Today the Pound has continued rising despite data revealing that the UK economy grew at a slower pace than expected in August. UK GDP was 0.1% month on month in July, down from 1% in June and missing analysts forecasts of 0.6%.
Economic growth slowed as covid cases ticked higher and millions of workers were told to self isolate.
The Euro is edging lower following the European Central Bank’s decision yesterday. The central bank announced that it will only slightly reduce it emergency bond purchases over the coming quarter, as expected.
The ECB is taking small steps to unwind its emergency aid. However, the central bank also said that the support could continue until at least the end of March next year, if not longer. The ECB gave no clues as to what the next moves could be.
The decision was taken by the ECB as inflation hit an almost decade high of 3%. German inflation data was release today and confirmed that consumer prices in the Eurozone’s largest economy hit 3.9% year on year.
Looking ahead ECB President Christine Lagarde is due to speak. However, she is unlikely to vring anything new to the table.
