eur-bank-notes-magnifying-glass - EUR
  • Pound (GBP) rise last week after hawkish BoE comments
  • UK inflation data is in focus this week
  • Euro (EUR) fell last week despite a hawkish Lagarde
  • Eurozone consumer confidence is due

The Pound Euro (GBP/EUR) exchange rate is flat on Monday after rising across the previous week. The pair rose +0.30% last week, settling on Friday at €1.1518 and trading in a range between €1.1490 – €1.1535. At 05:35 UTC, GBP/EUR trades -0.07% at €1.1480.

The pound rose across last week, supported by hawkish comments from the Bank of England governor Andrew Bailey. Mr Bailey acknowledged for the first time that the UK is experiencing a wage-price spiral. He pledged to raise interest rates as much as necessary in order to get inflation back to the bank’s 2% target.

Bailey highlighted that the UK was experiencing a second round effect of inflation as price rises spread rapidly across the economy from energy and food into wages and price-setting by companies.

While there is no high-impacting economic data today, the focus is very much on Wednesday’s inflation data, as measured by the consumer price index. The CPI is expected to cool rapidly to 8.3% year on year, down from 10.1% in March.  However, Core inflation which strips out more volatile items such as food and fuel is expected to stay at 6.2% year on year in April.

Sticky core inflation or higher-than-expected consumer prices could fuel bets that the Bank of England will raise interest rates again at the June meeting.

The euro eased across last week despite hawkish commentary from European Central Bank policy makers including ECB president Christine Lagarde. Lagarde said that while the central bank has covered a large part of the journey towards taming inflation, the ECB still has more ground to cover in order to tame inflation.

Data on Friday showed that German wholesale inflation cooled by less than expected to 4.1% year on year from 6.7%.

Today consumer confidence data for the block is in focus. Expectations are for consumer confidence to improve to -17 from -17.5.