- Pound (GBP) edges higher building on gains from last week
- BoE interest rate decision on Thursday
- Euro (EUR) fell on Friday despite high German inflation
- ECB interest rate decision on Thursday
The Pound Euro (GBP/EUR) exchange rate is just a pip or two higher on Monday adding to gains from last week. The pair gained 0.3% across last week, settling on Friday at €1.1727 after rising as high as €1.1782 earlier in the week. At 05:45 UTC, GBP/EUR trades +0.01% at €1.1728.
The Pound pushed higher at the end of last week, despite UK economic growth stalling at the start of the fourth quarter. The GDP for October came in at just 0.1%, down from 0.6% in September and well below the 0.4% that analysts had forecast.
The data revealed that the UK economy slowed even before the government tightened COVID restrictions under plan-B, which doesn’t bode well for economic growth across the rest of Q4.
Analysts are now broadly expecting the Bank of England to push back on raising interest rates and hold off until the February meeting. By this time, they will have more of an understanding on how Omicron impacted the economy.
The nine policy makers at the BoE will announce their monetary policy decision on Thursday, in the final meeting of the year.
There is no high impacting UK economic data due to be released today. However, there is plenty of data due to be released across the week, including UK unemployment, inflation figures and retail sales.
The Euro moved lower versus the Pound but gained versus the US Dollar on Friday after the final reading of German inflation for November confirmed that prices were rising at the fastest pace in 29 years. German inflation rose 5.2% year on year in November.
Despite inflation surging across the region, according to ECCB President Christine Lagarde, the central bank are unlikely to raise interest rates in 2022, a stark contrast to the BoE and the Federal Reserve, which could raise rates in the coming months.
There is no high impacting Eurozone data due to be released today. The focus this week will be firmly on the ECB monetary policy meeting on Thursday.