GBP/EUR: UK & Eurozone Inflation to Drive Pound vs. Euro

The pound euro (GBP/EUR) exchange rate is rising for a second straight day.

The euro fell yesterday after Spanish inflation dropped to 3.3% YoY from 6% and German inflation cooled to 7.4% from 8.3%.

Today eurozone inflation is expected to cool to 7.1% YoY from 8.5%. However, core inflation is expected to rise to 5.7% from 5.6%, which could add pressure to the ECB to keep hiking rates.

The pound has been supported by an upbeat market mood and expectations that the Boy could keep hiking as inflation remains in double digits.

UK Q4 GDP data is due to be released and is expected to show that the economy stalled at 0% after contracting -0.2% in Q3.