- Pound (GBP) rises after falling last week
- Strikes highlight the cost of living crisis
- Euro (EUR) falls as recession fears mount
- Russian gas halt sees gas prices rise
The Pound Euro (GBP/EUR) exchange rate is edging higher at the start of the week, paring some losses from last week. The pair fell 0.3% last week, settling on Friday at €1.1782, after trading in a range between €1.1745 – €1.1925. At 05:45 UTC, GBP/EUR trades -0.4% at €1.1890.
The pound fell across the board last week after data raised concerns over the outlook for the UK economy. Inflation rose to double digits for the first time in 40 years, intensifying the squeeze felt by households across the country. Surging prices and dismal consumer confidence saw retail sales drop again, and a recession is largely unavoidable.
Highlighting the deepening cost of living crisis, Railway workers strike over the weekend, and workers at the U’s largest container port, Felixstowe, are due to start an 8-day strike. The union and shipping companies have warned that the strike could seriously affect trade and supply chains lifting inflation high.
There is no high impacting UK data today, so sentiment is like to drive the pound’s value.
The euro managed to rise against the pound last week but fell versus its major peers after economic growth for the region was downwardly revised to 0.6% quarter on quarter in Q2, down from 0.7%. Inflation concerns and recession fears also rose.
Today the euro is falling sharply after Russia announced over the weekend that it would cut gas supply to Europe along the Nord Stream 1 pipeline for three days at the end of the month. Following the news, gas prices rose to a 5-month high.
The move could push inflation higher after it rose to 8.9% year on year in July, a record high, and German wholesale inflation, PPI rose to 37%.
Looking ahead, there is no high impacting eurozone data due to be released today, so sentiment will drive the pair. Looking ahead, eurozone PMI data will be in focus tomorrow.