- Pound (GBP) rises for a second day
- Manufacturing PMI fell to 47.9
- Euro (EUR) falls ahead of PPI
- Wholesale inflation is forecast to fall
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.14% in the previous week, settling on Monday at €1.1389, after trading in a range between €1.1351 – €1.1404. At 08:45 UTC, GBP/EUR trades +0.22% at €1.1415.
The pound is pushing higher on Tuesday amid an upbeat market mood and as Investors await a speech by Bank of England chief economist Huw Pill. Investors will be listening closely to his comments for clues on where the Bank of England sees the future path for interest rates.
Inflation still in double digits it could be difficult for the Bank of England to consider pausing rate hikes. At third the central bank leaves that inflation will cool sharply over the coming quarter and the rest of the year. Should Huw Pill focus on early signs of easing constraints in the UK labour market, then the pound could come under pressure.
The speech comes after data yesterday showed that manufacturing activity slowed by more than expected in March. The manufacturing PMI fell to 47.9, down from 48 in the preliminary reading and down from 49.3 in February. The level 50 separates expansion from contraction.
The euro is heading lower again today as investors continue digesting yesterday’s manufacturing PMI data, which showed that activity in the sector slowed to a four-month low in March of 47.3, down from 48.5 in February. The data shows that the sector remains in troubled waters, although supply chains have improved.
Attention now shifts to eurozone producer price index, which measures inflation at the wholesale level. PPI is expected to cool to 13.5% YoY in February, down from 15% in January.
Cooling PPI is often considered a lead indicator for consumer prices and suggests that CPI inflation could cool too.
