- Pound (GBP) falls for a secondary
- Housing sector shows signs of concerns
- Euro (EUR) rises despite divisions in the ECB
- German wholesale inflation data is due
The Pound Euro (GBP/EUR) exchange rate is rising at the start of the week, adding to gains from the previous week. The pair rose +0.21% across last week, settling on Friday at €1.1715 and trading in a range between €1.1609 – €1.1737. At 07:35 UTC, GBP/EUR trades +0.07% at €1.1721.
The pound slipped in quiet trade yesterday as investors weighed the latest house price data and considered an upbeat UK manufacturer’s outlook for 2023.
According to right move, house prices fell in June for the first time in six years, suggesting that the summer slowdown was coming earlier than usual amid turmoil in the mortgage market. Expectations of further interest rate hike from the Bank of England has seen the interest rates for a two-year fixed mortgage rise to 6% for the first time in years.
Meanwhile, UK manufacturers revised their outlook for the year thanks to strong demand for aircraft and electronics. This is encouraging news for the sector, which has been deep in contraction recently.
Looking ahead, the UK economic calendar is quiet today, but all eyes will be on Wednesday’s inflation data and Thursday’s Bank of England interest rate decision. The central bank is widely expected to raise interest rate think straight meeting to 4.75%.
The euro traded flat yesterday as investors digested comments from ECB chief economist Philip Lane. Mr. Lane played down the prospect of a September rate hike while revealing a sharp divide in the outlook for interest rate hikes. His comments sharply contrasted with executive board Isabel Schnabel, who insisted that this is not the time for complacency.
The ECB is expected to raise interest rates by 25 basis points in July. However, what comes next remains to be seen. While some ECB officials suggest there is no urgency in committing, others remain more hawkish and indicate that it is better to err on the side of doing too much than too little.
German wholesale inflation data is due and is expected to cool significantly to 1.7% year on year, down from 4.1% in April.