- Pound (GBP) has struggled amid doubts over BoE’s next move
- UK manufacturing PMI is due
- Euro (EUR) rose despite weaker data
- EZ PPI data is due
The Pound Euro (GBP/EUR) exchange rate is rising, paring losses from the previous session. The pair settled -0.36% lower on Monday at €1.1890 after trading in a range between €1.1878 – €1.1954. At 05:45 UTC, GBP/EUR trades +0.2% at €1.1914.
In the previous session, the pound came under pressure amid a dismal market mood. Risk aversions sent European stock markets lower as investors fretted over surging inflation, a more hawkish Federal Reserve, and the ongoing uncertainty from the Russia Ukraine war.
Yesterday’s data was in short supply given the UK bank holiday. Today’s attention will be on the final release of the manufacturing PMI for April. The data is expected to confirm 55.3, the preliminary reading, up from 55.2 in March. A stronger reading makes a big difference to the pound as investors look firmly ahead to the Bank of England interest rate decision.
The euro rose in the previous session, despite disappointing data across the board. German retail sales unexpectedly fell in March. Sales dropped by -0.1% month on month in March, down from 0.2% in February and well short of the 0.3% rise forecast. Weaker sales come as inflation in Europe’s largest economy rose to a record high, and households appear to have reined in spending as prices headed higher.
Eurozone consumer confidence also unexpectedly declined to 22 in April, down from 21.6 in March and much worse than the -16.9 that analysts had penciled in as the Russia Ukraine conflict weighed on sentiment.
Today, the eurozone economic calendar remains in focus with the release of eurozone wholesale inflation as measured by the producer price index (PPI), which is expected to surge to a record 36%, up from 31%. High PPI usually feeds through lifting consumer prices higher.
In addition to data, European Central Bank governor Christine Lagarde is due to speak. Any dovish commentary could send the Euro lower.
