GBP/EUR: Euro vs Pound Awaits ECB Address At End Of QE
  • Pound (GBP) rises adding to last week’s gains
  • UK manufacturing data raises recession worries
  • Euro (EUR) falls after German trade data
  • ECB Lagarde and Lane to speak

The Pound Euro (GBP/EUR) exchange rate is rising, extending gains from the previous week. The pair rose +0.38% across the previous week, settling on Friday at €1.1680 and trading in a range between €1.1611 – €1.1701. At 08:35 UTC, GBP/EUR trades +0.09% at €1.11690.

The euro is heading lower as investors digest the latest trade data from Germany as the economy battles an industrial slowdown. The country’s trade surplus, which measures the difference between exports and imports, fell slightly to 15.9 billion.

Exports fell 0.9% compared to the previous month, better than the 1.5% decline analysts had forecast. Meanwhile, imports for 1.4% compared to June.

The data follows German manufacturing PMI figures on Friday which showed a deep slump in August as output fell at its fastest pace since May 2020.

Looking ahead, attention now turns to speeches by ECB president Christine Lagarde and chief economist Philip Lane. Investors will be watching closely for clues over the outlook for the eurozone economy and where the central bank sees interest rates heading.

The ECB is due to meet on the 14th of September, and the market is unsure whether the central bank will hike interest rates at the meeting.

The pound is edging higher at the start of the week, extending gains from last week amid an upbeat market mood. However, the rise in the pound is likely to be limited amid rising concerns over the health of the UK economy.

Data on Friday showed that UK factory activity dropped to 43, the lowest in 39 months. This is just the latest sign that the UK economy is under pressure as the Bank of England raises interest rates.

With inflation in the UK at 6.8% while over three times the Bank of England’s target level, the central bank and pools policy tightening. As a result, the prospect of further rate hikes also raises the chance of a deeper recession.