- Pound (GBP) extends gains after a hawkish Andre Bailey
- UK economic calendar includes unemployment data, CPI & retail sales
- Euro (EUR) slips despite ECB tapering bond purchases
- Eurozone calendar is quieter this week
The Pound Euro (GBP/EUR) exchange rate is moving higher at the start of the week, extending gains for a third straight day. The pair gained 0.4% across the previous week settling on Friday at €1.1711, 100 pips up from the weekly low. At 05:45 UTC, GBP/EUR trades +0.06% at €1.1720.
The Pound rallied across the previous week despite signs that economic growth is slowing. UK monthly GDP in July slowed to just 0.1% down from 1% in June and missing forecasts of 0.6%. Growth slowed as covid cases started to rise and self-isolation rules meant that thousands of workers were being forced to stay at home.
Instead the Pound focused on the hawkish comments coming from the Bank of England and more specifically the Bank of England Governor Andrew Bailey. Andrew Bailey said late last week that he believed that the minimum conditions had been met to hike interest rates from the current historic lows. The prospect of a sooner move by the central bank to tighten policy sent the Pound surging.
Looking ahead, this week there is plenty of UK data for investors top sink their teeth into. This includes UK unemployment data on Tuesday, consumer price inflation on Wednesday and retail sales on Friday.
The Euro came under pressure in the previous week after the European Central Bank meeting. At the highly anticipated meeting the ECB announced that they will start reducing its bond purchases under the PEPP in the coming quarter. The move was widely expected, and the ECB also said that the programme will run at least until the end of March, opening it up for extension.
The move by the ECB comes as inflation in the bloc sits at an almost decade high but as both consumer and business confidence in Germany, the Eurozone’s largest economy start to falter.
Looking ahead this week is a much quieter week as far as Eurozone data is concerned. There is the final reading of Eurozone CPI and also industrial production data for the region but little else.
