- Pound (GBP) set to rise over 1% this week
- UK housing market showed weakness
- Euro (EUR) falls as eurozone inflation cools
- There is no eurozone data due today
The Pound Euro (GBP/EUR) exchange rate is holding steady after five days of gains. The pair rose +0.07% in the previous session, settling on Thursday at €1.1640 and trading in a range between €1.1675 – €1.1637. At 05:35 UTC, GBP/EUR trades 0% at €1.1638. The pair is set to rise over 1.1% across the week.
The pound pushed higher in the previous session as UK manufacturing activity was upwardly revised in May, contracting at a slower pace than initially feared. The UK manufacturing PMI was 47.1 in May down from 47.8 in April but ahead of the 46.9 from the preliminary reading.
Contraction in the manufacturing sector is in sharp contrast to the growth which is still being seen in the service sector which is itself inflationary.
Elsewhere data surrounding the housing market highlighted weaknesses. Mortgage approvals fell in a sign of a new housing downtown.
British lenders approved fewer loans for house purchases in April compared to March, and the value of a new mortgage also dropped according to data from the Bank of England. 48,690 new mortgages were approved in April, down from 51,488 ten March.
There is no high-impacting UK economic data due to be released today. Instead, investor sentiment is likely to drive the pound.
The euro has struggled this week and fell they were against the pound yesterday after data showed that eurozone inflation had fallen to its lowest level since Russia invaded Ukraine in early 2022.
Eurozone inflation dropped to 6.1% YoY in May down from 7% in April. This was below the 6.3% rate that was forecast. Core inflation fell to 5.3% down from 5.6%, expectations have been product line to 5.5%.
Despite the cooler inflation, the head of the European Central Bank, Christine Lagarde signal that more interest rate hikes were needed in order to plain inflation which was still three times the central bank’s target.
There is no high-impacting Eurozone economic data due to be released today. Sentiment will likely drive the euro.