- Pound (GBP) has struggled amid doubts over BoE’s next move
- BoE rate decision later in the week
- Euro (EUR) gained after stronger than forecast IFO business sentiment
- German retail sales, EZ manufacturing PMI & consumer confidence data due
The Pound Euro (GBP/EUR) exchange rate is rising at the start of the week adding to gains last week. The pair gained 0.25% across last week, settling on Friday at €1.1921, after trading in a range between €1.1894 – €1.1934. At 05:45 UTC, GBP/EUR trades +0.13% at €1.1936.
The pound pushed higher on Friday boosted by a risk-on mood in the financial markets and news that post-Brexit border checks will be pushed back for the fourth time. According to the government, this will save the UK around £1 billion.
The news has been welcomed at a time when the UK is going through a cost-of-living crisis which is slowing economic growth and could potentially push the UK into recession. Last week’s data revealed that company insolvencies in the UK have increased to a ten-year high. Furthermore, the number of companies experiencing severe financial distress rose by almost 20% over the past 12 months.
Concerns over the economic outlook for the UK have meant that Bank of England policymakers have sounded move dovish than previously. Whilst inflation is at a 30-year high, the BoE fear pushing the UK into recession.
The BoE is due to announce its interest rate decision on Thursday and is expected to hike rates by 25 basis points. This would mark the fourth rate hike in four meetings.
The euro came under pressure last week after data revealed that economic growth in the Eurozone grew at a slower pace in the first quarter of the year. Eurozone GDP came in at 0.2% quarter on quarter, down from 0.3% in the final three months of 2021.
Rising energy and food prices amid the fallout from the Russia – Ukraine war has slowed growth and is expected to slow growth further in the current quarter.
Today German retail sales and Eurozone manufacturing PMI will be in focus in addition to eurozone consumer confidence which is expected to confirm -16.9 in April.