• Pound (GBP) fell yesterday after weak GDP growth
  • UK unemployment expected to fall
  • Euro (EUR) roses yesterday after weekend elections
  • German inflation & economic sentiment data due

The Pound Euro (GBP/EUR) exchange rate is edging higher snapping a two-day losing run. The pair gained 1% across the previous week, settling at €1.1968 on Monday, after trading in a range between €1.1900 – €1.1989. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1973.

The Pound fell in the previous session after data from the Office of National Statistics showed that the UK economy expanded by just 0.1% month on month in February, down from 0.8% in January.

On the one hand, the fall in manufacturing was offset by the increase in the service sector. Even so, this was still well below the 0.4% growth that analysts had expected.

The Omicron bounce faded quickly as the squeeze on household incomes rose. The outlook for growth from here could well be more depressing as inflation ramps up further.

Slowing growth also puts the BoE in a challenging place, amid concerns that another interest rate hike could tip the UK into recession.

Looking ahead attention will now turn to the UK jobs data due. unemployment is expected to fall to 3.8% in the three months to February, down from 3.9%. Average earnings including bonuses are expected to rise by 5.7%, up sharply from 4.8% which could unnerve policymakers at the central bank, as inflation runs hot at a 30 year high.

The Euro showed some strength in the previous session after the market continued digesting the outcome of the first round on the French Presidential elections. Whilst Macron and Le Pen are both through the runoff on April 24th, Macron is still in the lead, albeit by a small margin.

Today investors will now look towards German inflation data, both consumer price inflation and producer price inflation.

CPI is expected to confirm 7.6% year on year in March, whilst wholesale inflation is expected to rise to 16.9% year on year.

The data comes ahead of the European Central Bank interest rate decision on Thursday.