- Pound (GBP) rebounds versus the euro
- BoE warns over the impact of rising interest rates on growth
- Euro (EUR) falls as Russia attacks Kiev
- No eurozone data is due
The Pound Euro (GBP/EUR) exchange rate is rising higher on Thursday paring losses from the previous session. The pair fell -0.2% on Wednesday, settling at €1.1970, at the low of the day. At 05:45 UTC, GBP/EUR trades +0.05% at €1.2027.
The Pound fell in the previous session following comment from the Bank of England Governor Andrew Bailey as he faced tough questions from MPs at the Treasury Select Committee, over the BoE’s monetary policy. A cautious tone from the BoE Governor over the economic outlook for the UK sent the pound lower. The BoE chief highlighted that higher interest rates will raise unemployment and slow growth, comments which sent the pound lower.
These comments overshadowed comments from other BoE policy makers, such as Tenreyo, who warned that further price increases in energy and tradeable goods would likely result in more persistent inflation.
Inflation in the UK rose to 5.5% in January, its highest level in 30 years. The BoE has raised interest rates at the past two meetings. Expectations are rising that they could hike again in March.
There is no high impacting UK data due to be released today. BoE Governor Andrew Bailey is due to speak again.
The Euro pushed higher yesterday, boosted by a better market mood regarding Russia. The first round of sanctions applied by the West on Russia were more modest than what was expected, keeping optimism of a diplomatic solution alive.
The euro shrugged off weaker than forecast German consumer morale. The downward trend is expected to continue into March with the GFK consumer confidence falling to -8.1, up from -6.7 in February.
Today the euro trades sharply lower as Russia attacks Kiev, the capital of Ukraine. Fear of all out war in Europe and concerns over energy supply have sent the euro tanking lower across the board. Leaders across the globe have condemned the attack by Putin’s forces and await to hear what the sanctions are likely to be.