- Pound (GBP) eases ahead of PMI data
- Huw Pill supports further rate hikes
- Euro (EUR) rises after strong German factory orders
- Composite PMI data is due
The Pound Euro (GBP/EUR) exchange rate is falling after four straight days of gains. The pair rose 0.8 % in the previous session, settling on Tuesday at €1.1410, after trading in a range between €1.1380 – €1.1460. At 08:45 UTC, GBP/EUR trades -0.07% at €1.1401.
The pound pushed higher in the previous session, boosted by the upbeat market mood and by hawkish comments from Bank of England chief economist Huw Pill hinted towards further interest rate rises at the upcoming May Bank of England monetary policy meeting.
With inflation still in double digits, Huw Pill stressed that policymakers will face a tough decision on whether to raise interest rates again from the current rate of 2.5% in light of the market fragility.
The market is currently expecting interest rates to peak up 4.5% but is divided around 50/50 as to whether the rate hike will come in the May meeting.
Looking ahead, investors will focus on the services PMI which is expected to be released and is expected to confirm the preliminary reading of 52.8 in March, down from 53.5. The level 50 surprise expansion from contraction. The services prices paid subdivision will also be monitored carefully for clues over inflation.
The euro is edging higher after several sessions of weakness. Data yesterday showed that consumer inflation expectations in the bloc dropped to the lowest level in over a year. Meanwhile, the producer price index, which measures inflation at the factory gate, fell by more than forecast to 13.2% year on year in March; this was down from 15% in February.
Looking ahead, attention is now on services and composite PMI data for the eurozone, which is expected to confirm the preliminary reading of 54.1.
Separately German factory orders jumped by more than expected to 4.8% month on month in February, up from 0.5% in January, and well ahead of the 0.3% forecast.
