- Pound (GBP) fell amid a lack of fundamental drivers
- BoE Broadbent to speak
- Euro (EUR) is supported by hawkish ECB commentary
- ECB expected to hike rates in May
The Pound Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell -0.21% in the previous session, settling at €1.1301, after trading in a range between €1.1284 – €1.1334. At 05:45 UTC, GBP/EUR trades -0.06% at €1.1294.
The pound drifted lower at the start of the week amid a lack of fresh fundamental drivers. After a busy UK economic calendar last week, this week is comparison very quiet. Today will see the release of public sector net borrowing, which will give some clues as to the health of the UK economy.
Today there is no high impacting UK economic data. Investors will be looking to Bank of England’s Broadbent who is due to speak and could shed more light on the outlook for rate hikes in the UK. With inflation still in double digits, the central bank is expected to hike rates again in May.
The euro rose in the previous session after German data shows that business sentiment improved slightly in April. The closely watched German Ifo business climate index Increased 93.6 in April up from 93.2, but this was slightly below the 94-level forecast. Meanwhile, the current assessment index fell from 95.4 to 95, while the business expectations index rose 92.2 up from 91.
The data broadly points to firms being more optimistic regarding the outlook while their view of current business fell.
Also supporting the euro are hawkish comments from European Central Bank officials. The Belgium central bank governor Pierre Wunsch said he would not be surprised if the eurozone interest rate increased to 4%, and said that he would only agree to halt interest rate increases once wage growth starts to form.
He is just the latest in a string of ECB officials sounding hawkish ahead of the May meeting. Today there is no high impacting Eurozone economic data, which could leave the common currency drifting.
