- Pound (GBP) edges lower after gains last week
- UK GDP, manufacturing & industrial production data due
- Euro (EUR) rises after French election
- ECB interest rate decision due later in the week
The Pound Euro (GBP/EUR) exchange rate is edging lower paring some gains from the previous week . The pair gained 1% across the previous week, settling at €1.1977 on Friday, after trading in a range between €1.1857 – €1.2040 across the week. At 05:45 UTC, GBP/EUR trades -0.13% at €1.1961.
The euro lost ground across the previous week as jitters over the French presidential elections and the fallout from the Ukraine ear overshadowed encouraging data and hawkish minutes from the latest ECB meeting.
In the runup to Sunday’s election, the euro weakened as far-right Marine Le Pen closed the gap in the polls. While Macron is still the favourite, a Le Pen victory is no longer out of the question.
Looking ahead, the political situation in France will remain in focus, with investors watching the polls closely over the coming weeks. Although voting for the second round will take place on 24th February.
This week, the central focus will be the European Central Bank interest rate decision due on Thursday. The minutes from the March ECB meeting showed that the central bank was adopting a more hawkish stance as inflation in the bloc surged to a record high.
The pound rose versus the euro across the previous week, but that was more due to euro weakness rather than pound strength. The pound fell hard versus the US dollar. Concerns over rising inflation and the Bank of England tipping the UK into recession if policymakers hike rates hit demand for sterling.
Last week was a quiet week for UK data. This week the calendar is busier. Today sees the release of the UK monthly GDP for February. Analysts expect the UK economy to grow 0.3% month on month in February, after rising 0.8% in January.
Manufacturing and industrial production data is also due and is expected to show growth at a slightly slower pace in February compared to January.
