- Pound (GBP) rises for a 4th day
- UK GDP data due later in the week
- Euro (EUR) awaits retail sales data
- Hawkish ECB officials support the euro
The Pound Euro (GBP/EUR) exchange rate is rising for a fourth straight day. The pair rose 0.09% in the previous session, settling on Monday at €1.1401, after trading in a range between €1.1374 – €1.1411. At 09:45 UTC, GBP/EUR trades +0.06% at €1.1408.
The pound pushed higher yesterday in quiet trade as the UK stock market was closed for the long Easter weekend break. Trading in the forex markets was muted and saw thin volumes.
The pound had risen against most of its major peers last week, despite a lack of fresh fundamental drivers and thanks to a smaller-than-expected slowdown in UK service sector activity. Hawkish comments from Bank of England chief economist Huw Pill also helped to lift the pound.
This week the pound could be influenced by the International Monetary Fund’s World Economic Outlook and a speech by BoE Governor Andrew Bailey. Investors will be listening carefully for clues as to whether the central bank is looking to hike rates again at the May meeting.
On the data front, the key release will be the UK monthly GDP for February which is expected to show that the UK economy grew again in February after rebounding in January. Stronger than expected GDP growth could fuel bets of tighter monetary policy, lifting the pound.
The euro fell for the most part of last week, before jumping higher on Friday after hawkish comments from the European Central Bank’s Governing Council official Klaas Knot who insisted that the central bank was certainly not done with interest rate hikes. However, it is still not clear whether the next move will be a hike of 25 or 50 basis points.
Looking ahead, eurozone retail sales data will be in focus. Sales are expected to fall -0.8% month on month in March after rising 0.3% in February. Weak retail sales could fuel bets of a smaller hike by the ECB.
