- Pound (GBP) slips despite upbeat manufacturing PMI
- BoE rate decision tomorrow
- Euro (EUR) gained unemployment drops, inflation rises
- EZ retail sales due
The Pound Euro (GBP/EUR) exchange rate is falling for a third consecutive day. The pair settled -0.12% on Tuesday at €1.1876, after trading in a range between €1.1860 – €1.1947. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1871.
The pound moved lower despite encouraging manufacturing data. The April manufacturing PMI revealed that activity in the sector picked up in April, although confidence tumbled as inflationary pressures continued to build.
The S&P Global CIPS Manufacturing PMI was upwardly revised to 55.8 in April, from 55.3 in the preliminary reading and up from 55.2 in March. New business and reduced deliveries times helped boost activity although overall confidence in the sector fell to its lowest level in 16 months.
Today there is no high impacting UK economic data. Attention will shift to the BoE interest rate announcement due on Thursday. The BoE is is widely expected to hike raise rates by 25 basis points, a move which is priced in. Instead, investors will be looking to see if there are any dissenters in the vote and when the central bank could start quantitative tightening to reduce the balance sheet.
The euro pushed higher yesterday after data revealed unemployment in the bloc fell to a record low while wholesale inflation, as measured by the producer price index rose to a record high.
Unemployment dropped to 6.8% in March, down from 6.9% in February, this was still short of the 6.7% drop that was forecast. The improving labour market suggests that wage growth was likely to continue.
Meanwhile, PPI jumped to 36.8% year on year in March, up from 31.5% in February. High PPI often means that consumer prices will continue rising.
Today attention is turning towards Eurozone retail sales. Investors will be looking for signs of whether consumers are starting to rein in spending as prices surge. Expectations are for retail sales to fall by -0.1% month on month.
