- Pound (GBP) falls on recession fears
- This is a quiet week for UK data
- Euro (EUR) boosted by Macron win
- German IFO business sentiment due
The Pound Euro (GBP/EUR) exchange rate is falling for a sixth straight day . The pair lost -1.5% across the previous week settling on Friday at €1.1890, the low of the week after trading in a 200 pip range between €1.2087 – €1.1880. At 05:45 UTC, GBP/EUR trades -0.20% at €1.1873.
The pound tumbled on Friday after a hat-trick of weak data. Consumer confidence fell to a 13-year low; retail sales dropped by more than forecast, and activity in the service sector was also much more vulnerable than expected.
The data had started to show cracks appearing in the economy as the cost-of-living crisis deteriorates and raises questions over the Bank of England’s ability to raise interest rates without pushing the UK economy into recession.
BoE Governor Andrew Bailey hinted that the central bank could hike rates less aggressively due to fears that the economy is heading for a recession. He also raised concerns over the risks of persistent inflationary pressures from the strong labor market.
The UK economic calendar is relatively quiet today with no high impacting data. Across the week, there is little in the way of data for investors to sink their teeth into.
The euro pushed higher on Friday after data showed that business activity in the eurozone was more substantial than forecast. The preliminary composite PMI rose to 55.3 in April ahead of the 54.7 expected but down from 56.5 in March. While the reading was above what analysts forecasted it was also a 15-month low.
Over the weekend, the French election was won by favorite, and current President Emmanuel Macron, who will serve five more years. He is the more euro-friendly candidate, which is helping to support the euro on the open.
Looking this week is a busy week for eurozone economic data with inflation and GDP numbers from Germany and Europe. Today German IFO business sentiment will be in focus.
