- Pound (GBP) fell despite surging inflation
- PMI data to show a slight slowdown in growth
- Euro (EUR) rises despite deteriorating consumer confidence
- Eurozone manufacturing and services PMI
The Pound Euro (GBP/EUR) exchange rate is rising on Thursday, paring losses from the previous session. The pair lost -0.19% yesterday, settling at €1.1996 and after trading a range between €1.1991 – €1.2056. At 05:45 UTC, GBP/EUR trades +0.15% at €1.2014.
The pound lost ground in the previous session, dragged lower by concerns over the rising cost of living. As measured by the consumer price index, inflation rose to 6.2% year on year in February, rising from 5.5% in January and coming in above forecasts of 6%. Inflation was driven higher by increasing food, energy, and fuel costs, which are expected to keep rising amid the fallout from the Russian war and Western sanctions.
To the backdrop of the biggest squeeze to households’ paycheques in 30 years, Chancellor Rishi Sunak announced a series of measures to help ease struggling families, such as a cut to fuel duty and a rise to the National Insurance contribution threshold.
Investors will now shift their attention towards UK PMI data for March, which is expected to show that business activity in both the manufacturing and service sector slowed slightly but remained comfortably above 50, the level that separates expansion from contraction.
The euro came rose versus the pound but fell against the US dollar, after data showed that the consumer sentiment in the eurozone deteriorated to its lowest level since May 2020, as concerns surrounding the Ukraine war and the increasing cost of living hurt sentiment. The index fell to -18.3 in March, well below the -8.8 from February and the -12.9 forecast.
Looking ahead, eurozone and German business activity levels will be under the spotlight. Activity across manufacturing and services is expected to grow slightly slower in March but remain comfortably in expansion territory. The Eurozone composite PMI is expected to be 54, down from 55.5