- Pound (GBP) boosted as UK economic growth picks up
- BoE’s Tenreyo due to speak
- Euro (EUR) under pressure after weak Eurozone manufacturing output
- ECB officials to speak.
The Pound Euro (GBP/EUR) exchange rate is pushing higher on Thursday after a flat close in the previous session. The pair gave up earlier gains to settle +0.00% flat on Wednesday at €1.1781 after briefly rising above €1.1800 again. At 05:45 UTC, GBP/EUR trades +0.1% at €1.1791.
The Pound extended gains again on Wednesday after data revealed that the UK economy grew by 0.4% in August. According to the figures from the Office of National Statistics the services sector was the largest contributor to growth in its first full month with without pandemic restrictions. Bars and restaurants helped the economy back on its feet. The economy is now just 0.8% smaller than it was before the pandemic.
Whilst this is good news, worries remain over the coming quarter as supply chain disruptions and rising energy prices mean that prices are rising higher. With bills from food shopping to gas bills expected to jump, there may be little capacity for discretional spending drawing closer to he Christmas months.
Tomorrow the UK economic calendar is light. Bank of England policy maker Tenreyo is due to speak and could shed more light on how the BoE views inflation and the probability of a rate hike sooner rather than later.
Currently the CME BoE watch tools sees a 72% chance of the first BoE rate rise in December priced into the market.
The Euro edged lower on Wednesday thanks in part to industrial production data for the bloc which indicated that the supply chain disruption was taking its toll. The Eurozone recorded industrial output of 5.1%year on year in August, down from 8% in July, but ahead of forecasts of 4.9%. The data supports concerns that the bloc’s recovery could run out of steam.
Looking ahead there is no high impacting Eurozone data due to be released. There are a couple of European Central Bank policy makers due to speak which could guide the common currency.