- Pound (GBP) falls for a fourth day
- BoE’s Catherine Man to speak
- Euro (EUR) rises after hawkish ECB comments
- Recession fears ease
The Pound Euro (GBP/EUR) exchange rate is edging lower for a fourth straight day. The pair fell -0.23% on Wednesday, settling at €1.1285, after trading in a range between €1.1259 – €1.1327. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1282.
The pound has fallen across most of this week as a lack of fresh fundamental drivers or economic data has left investors dwelling on the dire UK economic outlook.
Persistently high inflation, squeezed household incomes, and rising interest rates don’t bode well for the UK economy, which is service sector driven.
Today the economic calendar is quiet again. Attention will be on Bank of England policymaker Catherine Man who is due to speak. Investors will be listening carefully for clues on the expected future path of interest rates. Expectations are rising that the BoE could be nearing the end of its hiking cycle. Looking ahead, UK GDP data is due to be released on Friday.
The euro pushed higher in the previous session, supported by comments from Finnish central bank chief Olli Rehn who said that interest rates need to rise significantly over the upcoming meetings in order to restrain growth and rein in inflation.
His comments are in line with those from ECB governing council member Isabel Schnabel who made a similar comment at the start of the week.
the ECB has raised interest rates by 250 basis points since the hiking cycle started in July last year. The ECB hiked rates in December by 50 basis points and ECB President Christine Lagarde warned that 50 basis point rates hikes should be expected for a period of time.
In addition to a hawkish sounding ECB, the euro is also being supported by falling gas prices which suggest that a recession in the region could be milder than first feared.
The economic calendar has been quiet over the past few days and is expected to remain this way until next week.