- Pound (GBP) rose after a hawkish BoE
- UK inflation remains too high
- Euro (EUR) fell as CPI was downwardly revised
- ECB President Lagarde is to speak
The Pound Euro (GBP/EUR) exchange rate is falling after rising in the previous session. The pair rose +0.26% yesterday, settling on Wednesday at €1.1516 and trading in a range between €1.1465 – €1.1537. At 05:35 UTC, GBP/EUR trades -0.07% at €1.1415.
The pound rose in the previous session after hawkish comments from Bank of England Governor Andrew Bailey who doubled down on the central bank’s intention to fight inflation.
Mr. Bailey warned over persistently high inflation in the UK, blaming high food inflation and a tight labour market. He admitted that the economy is experiencing a wage-price spiral and said that the central bank would be prepared to hike rates as far as necessary to bring inflation down.
His comments came after UK jobs data yesterday showed that while the unemployment rate unexpectedly rose, average earnings also ticked higher, painting a mixed picture for the BoE.
The BoE hiked rates by 25 basis points to 4.5% in the May meting and could hike rates again in the June meeting.
Today the UK economic calendar is quiet, leaving sentiment to drive the market.
The euro slipped in the previous session after eurozone inflation was downwardly revised to 0.6% month on month in April, down from the preliminary reading of 0.7% and down from 0.9% in March. The annualised figure remained at 7%, up from 6.9% in March.
The data is unlikely to change the European Central Bank’s stance on monetary policy. The ECB said at the May policy meeting that it would continue to raise interest rates as inflation was still too high.
The EU Commission upwardly revised its inflation outlook for the year to 5.8%.
Today there is no high impacting eurozone economic data. Instead, attention will be on ECB President Christine Lagarde who is due to speak. Any comments regarding inflation or monetary policy could influence the euro.