- Pound (GBP) rose after inflation eased in August
- BoE rate decision due next week
- Euro (EUR) fell after EU announces windfall tax
- Eurozone industrial production slowed more than expected
The Pound Euro (GBP/EUR) exchange rate is edging higher adding to gains in the previous session. The pair settled +0.24% higher yesterday at €1.1552, after trading in a range between €1.1513 – €1.1595 across the session. At 05:45 UTC, GBP/EUR trades +0.02% at €1.1554.
The pound pushed higher against the euro in the previous session after data showed that inflation in the UK eased to 9.9% year on year in August but remains near the 40-year high of 10.1% reached in July. The slight cooling in inflation was thanks to a fall in petrol prices while food prices rose at the fastest pace since 2008.
The data comes hot on the heels of jobs data, which showed that unemployment fell to a 48-year low as people left the workforce. Demand showed signs of softening, with vacancies falling to a two-year low.
There is no high impacting UK economic data due to be released today. Instead, marke5ts will continue digesting the data from this week ahead of the Bank of England monetary policy announcement on September 22nd.
The UK central bank is widely expected to raise interest rates by either 50 or 75 basis points as it continues to fight against inflation which is around 5 times higher than its target level.
The euro fell in the previous session after Brussels announced that it would apply windfall taxes to energy companies to raise €140 billion to help households and businesses through the pain of record high energy prices this winter.
Those firms which are fossil fuel extractors will be required to pay back 33% of taxable surplus profits for the 2022 fiscal year.
On the data from eurozone, industrial production fell by 2.3% month on month in July, more than the forecast 1%. This reversed the gains made in May and June. Amid an environment of slowing orders and ongoing supply side problems, the outlook for the sector remains weak.