- Pound (GBP) pares yesterday’s BoE inspired gains
- HGV driver shortages & fuel shortages threaten economic growth
- Euro (EUR) rises after German consumer morale jumps
- ECB speakers due across the day
The Pound Euro (GBP/EUR) exchange rate is edging lower on Tuesday after strong gains in the previous session. The pair settled up + 0.4% on Monday at €1.1709 after trading as high as €1.1708. At 08:45 UTC, GBP/EUR trades -0.09% at €1.1699.
The Pound rallied in the previous session following hawkish comments from Bank of England Governor Andrew Bailey. The head of the central bank reiterated that the BoE could raise interest rates before ending its bond buying scheme. His comments came after the BoE said that it expects inflation to move beyond 4% by the end of the year, this is more than twice its 2% target.
Whilst the BoE says that it expects the rise in inflation to be temporary, another policy maker joined dissenter Michael Saunders saying that bond purchases should be tapered sooner rather than later.
Today upbeat mood towards the Pound has evaporated amid the ongoing fuel distribution issues and worker shortages across the UK. The government is reportedly bringing in the army to help with distribution of oil as pumps are left without petrol amid panic buying.
The Euro is moving higher, recouping some of yesterday’s losses thanks to upbeat German consumer sentiment. The German GFK consumer confidence revealed that consumers in the Eurozone’s largest economy are more upbeat than anticipated, the index rose 0.3, up from -1.1 in September and well ahead of the -1.6 forecast.
A similar survey in France revealed that same, as households shrug off concerns over rising energy prices.
Upbeat consumers often spend more which is considered good news for the economy.
Looking ahead the focus will be on a host of European Central Bank speakers including ECB President Christine Lagarde as well as De Guindos, Panetta and Schnabel. Investors will be watching closely for further clues over when the ECB could look to rein in support.
