- Pound (GBP) rises despite a lack of fundamental drivers
- Spring Statement tomorrow
- Euro (EUR) falls despite surging PPI
- Current account data due
The Pound Euro (GBP/EUR) exchange rate is edging a few points higher on Tuesday. The pair gained 0.25% in the previous session, settling on Monday at €1.1949 and after trading a range between €1.1880 – €1.1966. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1954
The euro came under pressure yesterday as peace talks stalled, and fighting continued in Ukraine. Russia declined Ukraine’s request for the two Presidents to sit down to peace talks, saying that more progress was needed in the negotiations first. Meanwhile, Ukraine refused to give in to Russia’s demand for forces to surrender in Mariupol.
The euro was weighed down by geopolitical tension. I looked past a record rise in wholesale inflation as measured by the producer price index, which rose to 25.9% yearly in February, up from 25% in January. This was the highest level since the record started in 1949, with rising energy costs the main reason for the rise.
European Central Bank President’s encouraging comments that she saw no sign of stagflation in the economy so far.
Today the euro is edging lower again. There is little economic data to drive trading with just the current account figures to be released. Russian developments will also drive trading.
The pound is rose yesterday despite a lack of fundamentals to push the currency higher. There was no high impacting UK economic data and no Bank of England speakers, just house prices data from Rightmove showing that house prices rose 1.7% in March and 10.4% annually. So far, three interest rate hikes have failed to cool house prices. Instead, a lack of supply continues to drive prices higher.
Today UK public sector net borrowing data is due to be released. This comes ahead of the Spring Statement tomorrow, where Chancellor Rishi Sunak could explain how he intends to help households and businesses navigate the jump in prices for energy, materials, and food.
