- Pound (GBP) supported after stronger manufacturing PMI
- House price data due
- Euro (EUR) came under pressure as Ukraine attacks continue
- Eurozone inflation data due
The Pound Euro (GBP/EUR) exchange rate is holding steady after rising for two straight sessions. The pair rose +0.13% on Tuesday, settling at €1.1972 after touching €1.2025 earlier in the day. At 05:45 UTC, GBP/EUR trades -0.02% at €1.1970.
The pound rose in the previous session after UK manufacturing PMI was upwardly revised to 58, from 57.3. Both output and new orders expanded at a quicker pace than initially estimated. There were signs that supply chain issues could be starting to dissipate.
Inflationary pressure remains a key headwind for the sector and geopolitical concerns were also highlighted in the survey. Fears of higher energy prices and commodity prices are likely to remain.
Today there is no high impacting UK data for investors to watch. Second tier mortgage data is expected to show that house price growth slowed slightly to 10.7% year on year in February.
The euro continued to come under pressure in the previous session as the Russian military attack on Ukraine continued. Peace talks between the two sides failed and Russia’s defense minister said that Russia will keep attacking Ukraine until it achieves its goal.
The Euro is being sold off due to its closeness both physically and through trade and energy to Russia and Ukraine. Geopolitical headlines will continue to drive the pair.
Germany and Eurozone manufacturing PMIs came in below forecasts suggests that high costs and ongoing supply chain issues were still holding back growth in the sector.
German inflation was 5.2% year on year in February, above the 4.9% recorded in January. Eurozone inflation is also expected to jump to 5.4%, up from 5.1%.
The question is whether the ECB will be inclined to hike interest rates given the uncertainty from Ukraine.
