- Pound (GBP) fell yesterday on recession worries
- UK GDP data is due
- Euro (EUR) rose as the USD fell post US inflation data
- ECB minutes are in focus
The Pound Euro (GBP/EUR) exchange rate is holding steady after losses in the previous session. The pair rose -0.69% yesterday, settling on Wednesday at €1.1665 and trading in a range between €1.1659 – €1.1759. At 06:35 UTC, GBP/EUR trades +0.01% at €1.1666.
The pound fell in the previous session paring gains from earlier in the week as investors weighed up record wage growth, the prospect of high-interest rates for longer, and a warning from the Bank that more mortgage pain to come.
England governor Andrew Bailey warned that there were consequences from the central bank’s rapid raising of interest rates. The semi-annual financial stability report released by the bank warned that By Q4 of 2026 around a million mortgage holders will have experienced at least a £500 a month increase on their labour payment. Around 4.5 million homeowners have already been hit with a rise in monthly payments since interest rates began to rise at the end of 2021. Four million more will have to bear higher costs by the end of 2026.
Looking ahead, attention turns to UK GDP data which is expected to show that the UK economy contracted 0.3% MoM in May, after contracting 0.2% in April. The data highlights the challenging position that the BoE finds itself o high inflation, high wage growth, and a contracting economy.
The euro rose in the previous session, boosted in part by U.S. dollar weakness after US inflation fell by more than expected. The eurozone economic calendar was like with the Spanish inflation, which cooled to 1.9% year on year.
Attention now turns to the release of the minutes from the June ECB meeting, where the central bank hiked interest rates by 25 basis points. Investors will watch the minutes closely for clues as to when the ECB may end its rate hiking cycle.
In addition to the minutes, the European Commission will release updated growth forecasts which should shed more light on the outlook for the economy across the coming year.wz