GBP/EUR: Will UK Service Sector PMI Drag Pound Lower?
  • Pound (GBP) rises on BoE rate rise expectations
  • Brexit in focus
  • Euro (EUR) boosted by USD weakness
  • Eurozone trade balance

The Pound Euro (GBP/EUR) exchange rate is edging a few pips higher on Friday. The pair settled +0.08% higher on Thursday at €1.1790 after hitting a daily high of €1.1830 a fresh two month high. At 05:45 UTC, GBP/EUR trades +0.02% at €1.1791. The pair is set to end the week 0.2% higher, its third straight week of gains.

The Pound surged higher across the week boosted by expectations that the Bank of England could move to raise interest rates as soon as December in order to bring surging prices under control.

Investors shrugged off more dovish comments from BoE policy maker Silvana Tenreyo who said that the BoE shouldn’t raise interest rates to tackle inflation caused by higher prices for energy and supply chain disruptions if the central bank considers these to be temporary.

Separately upbeat Brexit news has also helped the Pound after the EU released its plan to reduce the amount of post Brexit check on goods and medicines arriving into Northern Ireland from the rest of the UK.

The UK economic calendar was quiet today with just some data from the Office of National Statistics reporting that spending of UK debit and credit cards rose slightly in the week ending 7th October, suggests that rising prices haven’t hit consumer demand too much.

Looking ahead there is no high impacting UK data due for release today.

The Euro showed resilience on Thursday despite there being little in the wat of economic data for investors to sink their teeth into.

Instead, the Euro found support from the falling US Dollar. The Euro trades inversely to the greenback.

Furthermore, a group of top German research institutes cut the German GDP forecast for 2021. The Eurozone’s largest economy is only set to growth by 2.4% this year, down from 3.7% as the supply chain disruptions take their toll.

On the data front, investors could look towards the Eurozone trade balance due later today.