- Pound (GBP) rises after PM’s cabinet re-shuffle
- Falling house prices could prompt the BoE to change path
- Euro (EUR) slips ahead of inflation data
- No eurozone data is due today
The Pound Euro (GBP/EUR) exchange rate is treading water after two consecutive days of gains. The pair rose 0.3% in the previous session, settling on Tuesday at €1.1229, after trading in a range between €1.1183 – €1.1241. At 05:45 UTC, GBP/EUR trades +0.0% at €1.1229.
The pound pushed higher yesterday after Prime Minister Rishi Sunak shuffled his cabinet to suit better his promises to boost the economy reduce energy prices and improve his party’s fortunes ahead of a possible election next year. He created the standalone energy and net zero ministries, which are tasked with creating greater energy security for Britain and focusing on producing cheaper, cleaner alternatives.
The Prime Minister is under pressure to help steer the economy through a challenging period of double-digit inflation, stagnant growth and high energy costs.
There is no high-impacting UK economic data again today. However, there has been a slew of Bank of England policymakers speaking following the central bank’s interest rate decision last week.
In addition to current policymakers Cunliffe and Huw Pill, former Bank of England policymaker Danny Blanchflower warned that the Bank of England could be forced to adopt a less hawkish tone and a possible dovish pivot should the housing market collapse.
The euro came under pressure in the previous session following we can then expected German industrial production data and several ECB speakers German industrial output fell by more than forecast at the end of last year, dropping -3.1% month on month, Going to a shop drop in output from energy-intensive sectors. The data highlighted how the energy crisis at the start of winter was hurting the eurozone’s largest economy.
Meanwhile, ECB speakers were broadly supportive of the euro with ECB’s Nagel warning that rates were not yet restrictive. Meanwhile, ECB’s Villeroy said that the region was not far from peak inflation.
Today there is no high-impacting eurozone economic data due to be released. Investor sentiment will likely drive the pair.