GBP/EUR: Euro In Focus Ahead Of Barrage Of Data Releases
  • Pound (GBP) rises after strong manufacturing and housing data
  • BoE rate announcement due on Thursday
  • Euro (EUR) falls on mixed data, German retail sales drop, EZ unemployment falls
  • EUR looks to Euro zone inflation data

The Pound Euro (GBP/EUR) exchange rate is edging mildly higher, extending gains from yesterday. The pair rose  +0.23% on Tuesday, settling at €1.1993, towards the high of the day. At 05:45 UTC, GBP/EUR trades +0.02% at €1.2095.

The pound rebounded firmly versus the euro in the previous session after upbeat UK data. UK manufacturing activity slowed less than expected in January. British factory output grew for a 20th consecutive month with the PMI for the period coming in at 57.3, above the 56.9 level forecast and well above the 50 level which separates expansion from contraction.

Factory out put ramped up despite the Omicron variant spreading across he UK and amid signs that the supply chain crises had passed its peak. The data revealed that delays and logistic problems were starting to ease.

Adding to the upbeat mood surrounding the pound, UK house prices jumped 11.5% over the year and mortgage approvals topped expectations at 71,000, versus 66,000 forecast.

Looking ahead, there is no high impacting UK data due today. Investors will look ahead to the Bank of England monetary policy meeting on Thursday. The BoE could be ready to raise interest rates for a second time in under two months.

The Euro fell versus the pound but gained versus the US Dollar on Tuesday after a mixed bag of data. German retail sales were disappointing falling 5.5% month on month in December as renewed covid restrictions were imposed. The 2G rules meant that only the vaccinated or those who had recovered from COVID were allowed to entre shops, hotels, restaurants and bars.

On a more positive note, Eurozone unemployment eased to pre-pandemic levels, helped by better than forecast figures from Germany. Unemployment fell to 7%.

Today, investors will be watching the eurozone inflation figure closely. Expectations are for inflation to ese slightly in January, with core inflation slowing to 1.9% year on year, down from 2.6% and headline inflation expected to ease to 4.4%, sown from 5% in December. Weaker inflation could pull the euro lower.