- Pound (GBP) fell yesterday on recession worries
- CFOs turn cautious
- Euro (EUR) was lifted by hawkish ECB commentary
- No major data releases today
The Pound Euro (GBP/EUR) exchange rate is holding steady after losses in the previous session. The pair fell -0.25% yesterday, settling on Monday at €1.1631 and trading in a range between €1.1629 – €1.1669. At 06:35 UTC, GBP/EUR trades +0.02% at €1.1630.
The pound fell in the previous session amid growing concerns over the health of the UK economy. Recent data has supported more rate hikes from the BoE. However, higher interest rates will act as a brake on the economy, potentially tipping it into recession.
According to a recent survey, finance executives from top British firms have turned more cautious owing to high inflation and rising interest rates. The survey also showed that they expect a slowdown in hiring and pay growth.
The data comes as the Bank of England has said that the pace of wage growth is too high and it’s fuelling inflation. Data last week showed that wage growth was at a record level of 7.3%. The central bank has said that it will continue to monitor the labour market as it decides whether to raise interest rates for a 14th straight meeting on August the 3rd.
As well as the labour markets, the Bank of England will be watching inflation levels closely. Inflation data is due to be released tomorrow and is expected to show that inflation cooled to 8.2% year on year in June, down from 8.7%, but this is still over four times the central bank’s target level.
The euro edged higher on Monday in a quiet start to the week. The euro was boosted by hawkish commentary from several ECB policymakers. Another rate hike in July and September could be likely.
There was no high-impacting eurozone data released on Monday, and the eurozone economic calendar is quiet again on Tuesday, leaving sentiment to influence the pair.
