- Pound (GBP) rises to a year-to-date high
- BoE rate decision this week
- Euro (EUR) despite hawkish ECB
- German inflation data is due
The Pound Euro (GBP/EUR) exchange is edging lower after strong gains yesterday. The pair rose +0.4% in the previous session settling on Tuesday at €1.1509, after trading in a range between €1.1462 – €1.1523. At 07:35 UTC, GBP/EUR trades -0.04% at €1.1504.
The pound surged higher yesterday and trades close to a year-to-date high versus the euro and a 12-month high against the US dollar amid expectations that the UK economy is performing better than feared. A string of stronger-than-expected GDP, manufacturing, and jobs data this year, in addition to falling natural gas, have helped to lift the pound.
Strength in the pound comes ahead of Thursday’s BoE rate decision, where the markets have priced in a 25 basis point rate hike
The euro is rising as investors towards German inflation data, which is expected to show that consumer prices cooled in March to 7.2% year on year, down from 7.4% in February, in line with the preliminary reading.
The data comes after the European Central Bank raised interest rates by 25 basis points last week. ECB President Christine Lagarde was clear that more work needed to be done to tame inflation which has been too high for too long.
Concerns are rising over the health of the German economy as inflation remains high, industrial production and retail sales have fallen sharply.
German’s financial regulator warned that the country’s banking system is also experiencing stresses amid current volatility and also predicted weakness in the commercial property market.