- Pound (GBP) looks to BoE testifying before parliament
- UK unemployment is due tomorrow
- Euro (EUR) falls despite hawkish ECB comments
- EC growth forecasts awaited
The Pound Euro (GBP/EUR) exchange rate is falling after rising across the previous week. The pair rose +0.15% last week, settling on Friday at €1.1479 and trading in a range between €1.1432 – €1.1558. At 05:35 UTC, GBP/EUR trades -0.06% at €1.1473.
The pound rose across the previous week after the Bank of England raised interest rates by 25 basis points taking the rate to 4.5%. After 12 straight rate hikes, inflation in the UK is still too high at 10.1%. While the central bank left the door open for further hikes, BoE’s Governor Andrew Bailey also said that he expects previous rate hikes to weigh on the economy in coming quarters.
On Friday, UK GDP data showed that the economy grew by 0.1% quarter on quarter, In line with expectations and supporting a move by the central bank move up here for fighting growth forecasts for the year, saying that it did not expect a recession in the UK.
Today the focus will remain very much on the Bank of England as several members, including Bank of England governor Andrew Bailey will testify before the Treasury Select Committee on the central bank’s monetary policy. Comments over inflation and the potential direction of future monetary policy could influence the pound.
Looking ahead, UK unemployment data will be in focus on Tuesday, in an otherwise quiet week.
The euro shrugged off hawkish comments from European Central Bank policymakers last week, but this was nothing new for the markets.
German inflation data confirmed that consumer prices cooled to 7.2% year on year, and EU Sentix investor confidence also fell by more than expected to -13.1 in May.
Looking ahead the eurozone GDP data and the final inflation print with be the key data releases this week.
Today also sees eurozone industrial production data and the European Commission release economic growth forecasts. Stronger than forecast growth could help to boost the euro,