- Pound (GBP) rises ahead of BoE’s Andrew Bailey speech
- UK manufacturing activity slowed to a 13-month low
- Euro (EUR) rallied last week as inflation surged
- Eurozone investor confidence data due
The Pound Euro (GBP/EUR) exchange rate is climbing at the start of the new week, paring some losses from last week. The pair fell -1.1% across last week, settling on Friday at €1.1859, after trading in a range between €1.1745 – €1.2019. At 05:45 UTC, GBP/EUR trades +0.13% at €1.1874.
On Friday, the pound fell after the UK manufacturing growth slowed to a 13-month low in March. The manufacturing PMI was downwardly revised to 55.2, down from the preliminary reading of 55.5 and down from 58 recorded in February. The figure 50 separates expansion from contraction.
Delving deeper into the figures, the data revealed that manufacturers saw output decrease, as well as orders and growth, slowed in both consumer and investment goods. Concerns over rising prices and supply chain disruptions remain.
Today there is no high impacting UK data due to be released. Instead, attention will be on Bank of England Governor Andrew Bailey, who is expected to speak. Investors will be watching closely for clues over where the central bank sees monetary policy going over the coming months.
The BoE has raised interest rates over the past three meetings to rein in 30-year high inflation. However, the BoE has warned that growth could also slow significantly as inflation surges.
The Euro rallied at the end of last week after eurozone inflation surged to a record high of 7.5% year on year in March, mounting pressure on the European Central Bank to hike interest rates sooner rather than later.
Higher energy prices and food prices, which have surged since the Russian invasion of Ukraine, were the biggest drivers of inflation, which is now well above the ECB’s 2% target. An increasing number ECB policymakers are uncomfortable with such high inflation, and the central bank adopted a more hawkish stance in the most recent meeting.
Today, attention will shift to the Sentix Investor Confidence data, which is expected to show that sentiment deteriorated further in April.