- Pound (GBP) edges higher building on last week’s gains
- UK GDP Q2 & services PMI upwardly revised
- Euro (EUR) slipped despite surging EZ inflation
- Eurozone economic calendar quiet at the start of the week.
The Pound Euro (GBP/EUR) exchange rate is edging higher, extending gains from the last week . The pair finished the previous week 0.1% higher settling on Friday at €1.1679 after picking up from a two-month low of €1.1594 earlier in the week. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1684.
The Pound fell sharply lower at the start of last week, dragged down by concerns of stagflation. Rising prices owing to the ongoing supply chain disruption combined with increasing wages amid a labour shortage unnerved investors as economic growth is expected to slow in the third quarter. These fears, in addition to petrol stations running out of petrol and the UK coming to a standstill saw demand for the Pound plummet,
However, the mood towards sterling lifted towards the end of the week thanks to better-than-expected economic data. Firstly, the UK economy grew at a faster pace than expected in the second quarter with an upward revision to 5.5% quarter on quarter. On Friday the Services PMI revealed that the dominant service sector slowed by more than expected in September to 57.1, down from 60.3, well ahead of the 56.6 forecast.
There is no high impacting data today. In fact this week the UK economic calendar is quiet, meaning that macro themes such as the situation at petrol pumps, supply chain issues and labour shortages are likely to drive the Pound.
The Euro came under pressure at the end of last week after disappointing PMI data and German retail sales data and even though Eurozone inflation ticked higher
Consumer prices in the Eurozone rose to 3.4% year on year in September, a 13 year high. The rise in consumer prices comes after German inflation rose to 4.1% in September, the highest level in almost 30 years.
The drive high in consumer prices stems from surging energy prices. Furthermore, the record run on energy prices is not expected to ease anytime soon.
Looking ahead the Eurozone economic calendar is quiet at the start of the week, with retail sales mid-week likely to attract some attention.
