eur-bank-notes-magnifying-glass - EUR
  • Pound (GBP) rises on hawkish BoE bets
  • BoE to raise by 75 basis points?
  • Euro (EUR) falls ahead of Eurozone manufacturing PMI
  • German unemployment data is also due

The Pound Euro (GBP/EUR) exchange rate is rising, extending gains from the previous session. The pair rose +0.24% yesterday, settling at €1.1628 after trading in a range between €1.1589 – €1.1635 across the session. At 05:45 UTC, GBP/EUR trades +0.13% at €1.1643.

The pound climbed in the previous session and continues today, lifted by rising bets that the BoE could raise interest rates by 0.75% this week when it meets to discuss monetary policy. However, gains were limited by data showing that manufacturing activity contracted in October.

Today there is no high impacting UK economic data, so attention will remain firmly on the BoE meeting. The markers have now fully priced in an outsized rate hike from the BoE as the central bank attempts to tame 4 -decade high inflation. The meeting comes after inflation data showed that consumer prices had risen back up to double digits.

Should the BoE hike by 75 basis points, then the impact on the market could be limited. Investors will be watching the inflation and growth forecasts closely for clues on what comes next.

The euro fell against its peers on Tuesday amid a lack of significant data and as German bond yields declined.

Today the euro is looking towards German unemployment data and eurozone manufacturing PMI data.  The closely watched S&P Global manufacturing PMI is expected to confirm the initial 46.6 reading. This would be a decline from 48.4 in September. The level 50 separates expansion from contraction.

Manufacturing in the Eurozone has slowed considerably as new orders slide amid economic uncertainty and persistently high inflation.

The data comes after data at the start of the week showed that economic growth in the region slowed to 0.2% quarter on quarter in the July to September period and as inflation in the region hit a record high of 10.7%.

The ECB are expected to keep raising interest rates aggressively to tame lingering inflation.