gbp-british-pound-coin - GBP
  • Pound (GBP) rises after losses yesterday
  • Will UK inflation expectations rise?
  • Euro (EUR) steadies with no data due
  • ECB speakers are in focus

The Pound Euro (GBP/EUR) exchange rate is rising on Friday, after losses in the previous session. The pair fell 0.2% yesterday, settling at €1.1586 after trading in a range between €1.1564 – €1.1624. At 09:25 UTC, GBP/EUR trades up +0.1% at €1.1600.

The pound has struggled to gain traction this week, a week which has been particularly quiet on the economic calendar. However, this changes slightly today with the release of inflation expectations. This data point shows where the households see long-term inflation. Inflation expectations are expected to nudge higher, something that the Bank of England will be keen to avoid. When households and businesses raise expectations for future prices it also raises the likelihood of inflation becoming embedded within the economy.

Inflation currently stands at 11.1 percent a 41-year high. The Bank of England has raised interest rates at the past eight central bank meetings and is expected to hike interest rates again when they meet on Thursday. Lower than last month’s 75 basis points.

The euro slipped slower yesterday in a day of quiet trading with no eurozone economic data to drive trade. Today there is no high-impacting euro data, instead, investors will be looking ahead to next week when PMI data is expected to be released on Monday, and European Central Bank is due to make its interest rate decision on Thursday.

While there is no economic data due today, there will be speeches from two ECB officials. Investors will watch these speeches carefully for clues over where the ECB sees eurozone economic growth heading and for clues over the future path of interest rate hikes.

While the market is pricing in a 50 basis point rate hike from the ECB, ECB policymakers have sounded more cautious about slowing the pace of rate hikes with no clear consensus forming. In fact, last week ECB president Christine Lagarde warned that inflation, which appears to be cooling, could still rise higher.