- Pound (GBP) fell last week on growth fears
- BoE’s Bailey warned of slowing growth
- Euro (EUR) steady after gains last week
- German trade data
The Pound Euro (GBP/EUR) exchange rate is holding steady at the start of the week. The pair lost -0.16% across last week, settling on Friday, at €1.1595, after trading in a range between €1.1520 – €1.1698. At 05:45 UTC, GBP/EUR trades -0.01% at €1.1594.
The Pound came under pressure last week amid rising concerns over slowing growth. On Friday, the UK manufacturing sector was under the microscope as manufacturing activity tumbled to a two-year low in June.
The S&P Global UK manufacturing purchasing managers index (PMI) fell to 52.8 in June, from 54.6 in May, from a downwardly revised preliminary reading of 53.4. The survey also showed that manufacturers were at the gloomiest since COVID hit in 2020.
The data showed that inflationary pressures were hitting new orders and the data pointed to a sharp slowdown.
The Bank of England governor Andrew Bailey said earlier in the week that the central bank could have to act aggressively to rein in inflation. He added that there were signs that the British economy was entering a slowdown.
This week is a relatively quiet week for UK economic data. Today there is no high impacting macro data points from the UK. On Tuesday services PMI data and BoE speakers will be in focus.
The euro managed to rise versus the pound last week after European Central Bank President Christine Lagarde hinted to the central bank acting more aggressively to rein in inflation, although recession fears in the bloc are also growing.
Data last week revealed that inflation in the region surged to a new record high of 8.6% year on year in June, up from 8.4% forecast and well above the 8.1% recorded in May.
Looking ahead, German trade balance data is due today and later in the week the minutes to the latest ECB meeting, in addition to the European Commission’s quarterly growth and inflation forecast will be in focus.
