- Pound (GBP) steadies after two days of losses
- Food retail sales growth to slow
- Euro (EUR) supported by hawkish ECB comments
- Eurozone economic calendar is quiet
The Pound Euro (GBP/EUR) exchange rate is holding steady on Wednesday after two days of losses. The pair fell -0.3% in the previous session, settling at €1.1317 after trading in a range between €1.1304 – €1.1360. At 05:25 UTC, GBP/EUR trades +0.04% at €1.1322.
The pound fell in the previous session as the outlook in the UK remains bleak. According to market researcher NielsenIQ the squeeze on household incomes will weigh on growth in food retail sales to 5%.
The Bank of England has warned that the UK is heading into a long recession with inflation still in double digits and not expected to return to the central banks’ 2% target until early 2024.
NielsenIQ reported a 10.9% rise in UK grocery sales in the last four weeks of the year, which was a falling volume once inflation was taken into account.
Today the UK economic calendar is quiet, with no economic data due. Attention is also on Brexit talks amid chatter that a breakthrough could be soon.
The euro pushed higher in the previous session after ECB member Isabel Schnabel said that interest rates must rise further in order to slow the pace of inflation and bring it back to the central bank’s 2% medium-term target; she insisted that inflation will not subside by itself.
Schnabel’s hawkish comments come after the ECB raised interest rates by 50 basis points in December and after ECB president Christine Lagarde said that the central bank could raise interest rates at the next three upcoming meetings.
Meanwhile, the ECB’s governing council member Mario Centeno adopted a less hawkish approach saying that the current interest rate hiking cycle is approaching its end.
Today eurozone economic calendar it’s quiet again today. In fact, the eurozone economic calendar is quiet for the rest of the week.
Attention could be on France, where Macron’s plans to push back the retirement age in France risks a backlash and triggers strikes.
