- Pound (GBP) awaits CPI data
- Food inflation cooled to the lowest level this year
- Euro (EUR) rises on hawkish ECB comments
- German wholesale inflation cools by more than expected
The Pound Euro (GBP/EUR) exchange rate is rising, paring losses from the previous session. The pair fell -0.18% yesterday, settling at €1.1687 and trading in a range between €1.1651 – €1.1729. At 07:35 UTC, GBP/EUR trades +0.03% at €1.1695.
The pound slipped lower in the previous session after data from Kantar showed that food inflation had cooled to its slowest pace so far this year. According to Kantar’s data, food inflation eased to 16.5% in the four weeks to June 11, down from 17.2%.
The data comes ahead of today’s inflation report, which is expected to show that consumer prices eased very slightly to 8.6% year on year in May, down from 8.7% in April and 10.1% in March. Inflation appears to be cooling at a slower pace than initially expected, which is keeping pressure on the Bank of England to continue hiking interest rates. A cooler-than-forecast inflation print could pull the pound lower.
The Bank of England will meet on Thursday and is expected to raise interest rates for a 13th straight meeting. Expectations are for a 25 basis point hike to 4.75%. The market is pricing in a peak rate of 5.75%, or another 100 basis points worth of hikes. Economists are expecting peak rates to rise to around 5%.
The euro pushed higher in the previous session despite German wholesale inflation cooling by more than expected. Kevin producer prices fell by -1.4% month on month in May, after rising +0.3% in April. On an annual basis PPI rose 1%, down from 4.1% previously and well below the 1.7% forecast.
Instead, the euro pushed higher after hawkish comments from ECB policymakers, including Isabel Schnabel, who supported more rate hikes.
There is no high-impacting eurozone economic data due today.
