- Pound (GBP) fell last week despite the BoE rate hike
- UK composite PMI slipped by more than expected
- Euro (EUR) rose last week despite banking sector jitters
- German IFO business climate data due
The Pound Euro (GBP/EUR) exchange rate is rising after losses across last week. The pair fell 0.42% last week, settling on Tuesday at €1.1362, after trading in a range between €1.1280 – €1.1422. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1365.
The pound fell last week despite the Bank of England raising interest rates by a further 25 basis points as inflation remains persistently high at 10.4% and despite stronger than expected retail sales in February as consumer kept spending despite the ongoing squeeze on household incomes.
PMI data on Friday showed that business activity was slightly weaker than expected in March. The composite PMI rose at a slower pace than expected of 5.2, down from 53.1 in February and below the 52.8 forecast. The level 50 separates expansion from contraction.
A drop in manufacturing production was to blame as staff shortages dragged on output. Even so, the data points to the UK economy returning to growth in the first quarter of the year at just 0.2%.
Today there is no high impacting UK economic data due to the released. This week the UK economic calendar is slower. The main focus, in addition to the ongoing banking stresses will be UK Q4 GDP data, the final reading, later in the week.
The euro rose last week as UBS bought out Credit Suisse calming the market across most og the week regarding the banking stresses. However Friday saw fears surrounding the outlook for Deutsche Bank rise dramatically.
Friday also saw the release of much stronger than expected PMI data for the region. The composite PMI, which is considered a good gauge for business activity jumped to 54.1 in March, up from 52. Expectations had been for a rise to 51.9.
Attention will now turn to German IFO business climate data which is expected to ease slightly to 91 in March down from 91.1 in February. In addition to German business sentiment, ECB officials Frank Elderson and Isabel Schnabel will also be in focus.