- Pound (GBP) steadies after four days of losses
- UK manufacturing PMI data is due
- Euro (EUR) rose after inflation hits a record high
- German retail sales are due
The Pound Euro (GBP/EUR) exchange rate is edging higher on Thursday snapping a four-day losing run. The pair settled -0.7% lower yesterday, at €1.1552, after trading in a range between €1.1542 – €1.1672. At 05:45 UTC, GBP/EUR trades +0.08% at €1.1561.
The pound fell steeply across the board on Wednesday as recession fears continued to build. The pound has traded under pressure since the UK energy regular Ofgem approved a massive price cap hike last week. The move threatens to deepen the cost of living crisis.
Investors will be hoping that the election of a Conservative leader and Prime Minister could see some fiscal support offered, although this remains doubtful.
Looking ahead, pound traders will focus on manufacturing PMI data, which is set to confirm that the sector contracted sharply in August, falling to 46.
UK house price data will also be under the spotlight as price growth is expected to cool to 8.9% growth year on year, down from 11%.
The euro pushed higher in the previous session after stronger than forecast inflation data. Consumer prices rose to 9.1% yearly, up from 8.9% in July. Analysts had expected inflation to rise to 9%.
The jump in inflation comes as energy and food prices soar. Energy’s annual inflation was an eye-watering 38.3% in August. Meanwhile, food prices were up 10.6% annually.
The data comes as the European Central Bank is set to meet next week to discuss monetary policy. The central bank is expected to make another large rate hike, either 50 or 75 basis points. The central bank hiked rates in July for the first time in 11 years.
Today attention will remain on the economic calendar with the release of German retail sales, which are expected to be flat month on month in July after dropping -1.6% in June.
Eurozone manufacturing PMI data is also expected to confirm that activity contracted in August at 49.7. The level 50 separates expansion from contraction.