- Pound (GBP) fell as the UK economic outlook darkens
- Travel chaos will add to economic woes
- Euro (EUR) struggled despite German PPI rising to a record high
- Eurozone current account data
The Pound Euro (GBP/EUR) exchange rate is edging a few points higher on Tuesday. The pair settled -0.04% lower on Monday, at €1.1652, after trading in a range between €1.1609 – €1.1674. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1656.
The pound struggled in the previous session as the outlook for the UK economy remains downbeat. Not only is inflation elevated at 9% and expected to keep rising to 11%, but growth also is stalling and there is travel chaos across the county as train drivers go on strike. The strike could cost the UK economy up to £1 billion.
The strike comes as a YouGov survey revealed that British consumers are more pessimistic than their peers in other major economies over their personal financial situation and inflation. The data adds to evidence that the UK is being hit harder by the cost-of-living crisis.
With inflation still rising, real wages falling at the fastest pace on record, and the BoE hiking rates the cost-of-living crisis is unlikely to ease soon.
Looking ahead, there is no high impacting UK economic data. BoE speakers Tenryo and Pill will be speaking.
The euro struggled to gain much ground against the pound despite German wholesale inflation rising to a record high of 33.6% year on year in May. The data is considered a lead indicator for consumer prices and points to further gains in CPI inflation.
On the other hand, the euro came under pressure on news that Macron failed to win an absolute majority in the French Parliament. This means that he could struggle to pass legislation leaving his agenda without progress.
Looking ahead the eurozone economic calendar is light with just current account figures in focus. Broadly speaking this week is a quiet week as far as data for the region is concerned.
