- Pound (GBP) looks to BoE policymaker’s speeches
- No high-impacting UK data is due
- Euro (EUR) awaits inflation data from the bloc
- Hawkish ECB policymakers support the euro
The Pound Euro (GBP/EUR) exchange rate is falling for a second consecutive session. The pair fell -0.09% in the previous session, settling on Wednesday at €1.1359, after trading in a range between €1.1335 – €1.1385. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1355.
The pound slipped lower in the previous session but held onto most of the gains from the previous session when PMI data showed that the UK private sector returned to growth in February. The data fueled expectations that the Bank of England will continue hiking interest rates at the coming meeting.
Tomorrow there is no high impacting UK economic data. However, BoE policymakers Catherine Mann and John Cunliffe are due to speak. Investors will be scrutinizing the minutes for clues over the future path operate hikes. A more hawkish stance from the BoE could send the pound higher.
The euro rose in the previous session after more upbeat data supported the view that the ECB will continue hiking interest rates. German Ifo business climate index raise for a fourth straight month in February, rising to 91.1, up from 90.2 in January.
The data comes after German ZEW economic sentiment Improved for a fifth straight month in February as falling energy prices and cooling inflation lift the mood. It’s looking increasingly likely that Germany may avoid a recession or experience only a very mild contraction.
Looking ahead, attention will be on eurozone inflation which is expected to confirm the preliminary reading of 8.6% year on year. As this is the second reading, it tends to be less market-moving than the first reading.
Even though inflation is cooling, it’s still elevated, and the ECB is expected to hike interest rates again by 50 basis points in the March meeting. With data showing that the economy could avoid a recession, the ECB could continue hiking interest rates.