- Pound (GBP) falls against a stronger euro
- BoE governor Andrew Bailey warned over inflation shock
- Euro (EUR) rises on peace talk hopes
- Eurozone consumer confidence & German inflation
The Pound Euro (GBP/EUR) exchange rate is edging lower for a third straight day. The pair lost -0.9% on Tuesday, settling at €1.1804, after trading in a range between €1.1789 – €1.1928. At 05:45 UTC, GBP/EUR trades -0.02% at €1.1802.
The euro surged higher in the previous session, boosted by hopes of a diplomatic solution to the Ukraine crisis and despite German consumer confidence falling much more than expected.
Data revealed that German GFK consumer confidence is expected to deteriorate sharply in April, falling to the lowest level since February 2021. The forward-looking consumer sentiment index dropped to -15.5 in April, down from -8.5 in March, and well below the -12 forecast.
Rising energy, food, and fuel prices combined with ongoing supply chain issues and uncertainty stemming from the Ukraine war are weighing on consumer morale and could worsen over the coming months.
Euro investors brushed off the disappointing data and instead focused on hopes of a diplomatic solution to the Ukraine crisis as peace talks set off to an encouraging start. Russia pledged to radically cut back its military activity in northern Ukraine, in what could be the most significant shift since the beginning of the war.
Looking ahead, Eurozone consumer confidence and German inflation data are due to be released. German inflation is expected to rise to 6.4% year on year in March, up from 5.5% in February.
European Central Bank President Christine Lagarde is due to speak and could provide some clues as to when the ECB could start to hike interest rates.
The pound fell versus the strong euro but managed to gain versus the US dollar. There was no high impacting UK economic data released, leaving the pound to trade on sentiment.
Once again, there is little in the way of economic data. Bank of England’s Broadbent is due to speak. Investors will be keen to see whether he sheds more light on how quickly the BoE intends to raise interest rates this year. At the start of the week, BoE Governor Andrew Bailey warned about slowing economic growth and the ongoing inflation shock.
