The Pound Euro (GBP/EUR) exchange rate is heading northwards, building on gains from yesterday.

The Pound rallied in the previous session after strong labour market data. UK unemployment fell to a post pandemic low of 4.1%, down from 4.2%.

Today UK inflation data is in focus today and is expected to show prices rose to 5.2% in December. A strong labour market and elevated inflation could encourage the BoE could hike rates.

Meanwhile, UK political tensions in London could keep gains in the pound limited.

The Euro fell in the previous session owing to a strong USD and despite a considerable jump in German economic morale.

German inflation is in focus today and is expected to rise to 5.3%