Pound vs Euro to be Driven by Politics & Central Banks In The Week Ahead
  • Pound (GBP) rises after deal for the banks is agreed
  • BoE rate decision is due on Thursday
  • Euro (EUR) slips ahead of German wholesale inflation
  • ECB’s Lagarde to speak

The Pound Euro (GBP/EUR) exchange rate is rising adding to gains from last week. The pair rose 0.98% last week settling on Friday at €1.1410 after trading in a range between €1.1281 – €1.1476. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1414.

The pound is pushing high at the start of the week as the market mood remains jittery despite a deal whereby UBS agreed by the troubled bank Credit Suisse for CHF 3 billion over the weekend.

The deal came about after emergency talks in Switzerland between the two banks and the country’s financial regulator and is considered the best way to restore confidence in the financial markets after a week of serious volatility. The Swiss government has agreed to grant a guarantee against potential losses in the region of CHF 9 billion.  SNB has also agreed to provide liquidity assistance to the tune of CHF100 billion.

The news has help calm some fears but jitters remain ahead of a busy week for the pound, with both UK inflation data and the Bank of England interest rate decision base due on Thursday. The bank could raise interest rates by 25 basis points, but this is by number means guaranteed as the central bank continues to assess the fallout in the banking sector.

The euro dropped last week despite the easy be hiking interest rates by 50 basis points in line with expansion expectations, taking the lending rate to 3.5%. The ECB continues to fight game inflation which is proved to be stickier than expected.

Today investors will be looking towards wholesale inflation for Germany, which is expected to cool to 14.5% year on year in February, down from 17.8% in January.

ECB President Christine Lagarde will also be speaking tomorrow. Investors will be watching for any further clues over the next steps for monetary policy. However, given that the ECB meeting was just last week,