- Pound (GBP) rises on improving growth hopes
- UK services PMI rose 52.9
- Euro (EUR) slips despite strong German industrial output
- Tomorrow trading could be muted due to public holidays
The Pound Euro (GBP/EUR) exchange rate is rising for a sixth straight day. The pair rose 0.18 % in the previous session, settling on Tuesday at €1.1430, after trading in a range between €1.1381 – €1.1436. At 09:45 UTC, GBP/EUR trades +0.1% at €1.1435.
The pound is pausing for breath after a strong week of gains. The pound has had a really strong start to the year, beating all other major currencies.
The pound has been boosted by indications that the UK economy is holding up better than expected. GDP data showed that the economy grew 0.1% in the final three months of the year and GDP grew by a stronger-than-expected 0.3% in January.
The resilience in the UK economy, combined with an unexpected rise in inflation to 10.4% is boosting expectations that the Bank of England will continue hiking interest rates in May, despite concerns over the health of the banking system.
Earlier in the week, BoE Chief Economic Huw Pill hinted at further hikes from the BoE.
Today there is no high impacting UK economic data today. Investors will continue digesting yesterday’s services PMI data which showed that the UK dominant sector expanded again in March. The services PMI was 52.9, whereby 50 separates expansion from contraction.
The euro is showing resilience after stronger-than-expected German industrial production data. Output rose 2% month on month in February, after rising 3.5% in January. Strong data comes after German factory orders jumped by 4.8% month on month.
Broadly speaking, the data coming from Germany has been upbeat and points to the eurozone’s largest economy dodging a recession this year. A group of German institutes, including the IFO institute, has said that he expects the German economy to grow 0.3% in 2023.
Looking ahead, there is no major eurozone data which is due later today, and trading tomorrow is likely to be muted given that eurozone and UK markets are closed for the Good Friday bank holiday.
