- Pound (GBP) rose as the market mood improved
- UBS buys Credit Suisse
- Euro (EUR) fell despite hotter than forecast PPI
- German ZEW economic sentiment data due today
The Pound Euro (GBP/EUR) exchange rate is falling after gains in the previous session. The pair rose 0.37% yesterday, settling on Monday at €1.1451, after trading in a range between €1.1403 – €1.1458. At 05:45 UTC, GBP/EUR trades -0.07% at €1.1443.
The pound pushed higher against the euro in the previous session as the market mood improved as investors digested the UBS acquisition of Credit Suisse and support the buy creep of central banks to shore up liquidity in the market.
With hope growing that a line has been drawn under the banking crisis, investors are looking ahead to the Bank of England interest rate decision on Thursday.
The market is widely expecting the central bank to raise interest rates by 25 basis points should there be no more cracks appearing in the financial sector before then.
Meanwhile, the euro is rising against the US dollar, but it’s falling against the pound despite hotter-than-expected German wholesale inflation and hawkish commentary from the European Central Bank president Christine Lagarde.
German producer price index cools by less than expected to 15.8% year on year in February, down from 17.6% in January. While this is an easing in inflation, analysts had been expecting PPI to slow to 14.5%. The data feeds into the view that eurozone inflation is proving to be stickier than initially expected.
While testifying before the European Parliament committee on economic and monetary affairs, ASB president Christine Lagarde said that inflation is expected to remain too high for too long. Her comments come after the ECB raised interest rates by 50 basis points last week.
Attention now turns to economic confidence data, with the release of the closely watched ZEW economic sentiment index. This is expected to fool to 17.1 in March, down from 28.1 in February when sentiment rebounded strongly.