- Pound (GBP) edges higher after losses last week
- BoE hinted to a slowdown in rate hikes
- Euro (EUR) slips ahead of data drop
- EZ retail sales & investor confidence data due
The Pound Euro (GBP/EUR) exchange rate is rising after steep losses last week The pair fell over 2% in the previous week, settling on Friday at €1.1162, after trading in a range between €1.1132- €1.1415. At 05:45 UTC, GBP/EUR trades +0.13% at €1.1176.
The pound tumbled 2.1% across the previous week after the Bank of England raised interest rates by 50 basis points but hinted towards a more dovish stance going forward. The central bank lowered its inflation forecast for 2023 to just below 4% from 5% and adjusted the wording in the statement to reflect a less hawkish bias.
Data last week was also disappointing as the PMI figures showed the UK services sector had its worst month in two years in January. The services PMI was 48.7, down from 49.9 in December. The level 50 separates expansion from contraction.
This week is a quieter week as far as economic data is concerned, with little for investors to monitor until Q4 GDP data at the end of the week. Attention instead will be on BoE policy maker Catherine Mann who is due to speak.
The euro pushed higher last week after the ECB raised interest rates by 50 basis points and indicated that it would hike rates again at the coming meeting, likely by a further 50 basis points.
Furthermore, data from the region was relatively upbeat, with the composite PMI showing that business activity returned to growth in January, rising by a more than initially expected 50.3.
The eurozone economic calendar is busy and the start of the new week with investors focusing on German factory orders, eurozone retail sales, and Sentix investor confidence data.
German factory orders are expected to rebound in December, rising 2% month on month up from -5.3% in December.
Eurozone investor confidence is expected to improve as well to -11.9, up from -17.5. However, retail sales data is expected to show a deterioration, with sales falling 2.5% month on month in January after rising 0.8% in December.
