- Pound (GBP) flat across the week
- BoE rate decision in focus next week
- Euro (EUR) falls after the ECB meeting
- Concerns over eurozone growth
The Pound Euro (GBP/EUR) exchange rate is holding steady after gains in the previous session. The pair rose +0.18% yesterday, settling on Thursday at €1.1479 and trading in a range between €1.1447 – €1.1508. At 08:35 UTC, GBP/EUR trades +0.01% at €1.1480. The pair is set to trade flat across the week after two weeks of losses.
The euro fell in the previous session after the ECB, as expected, left interest rates on hold at 4% after 10 back-to-back interest rate hikes.
The central bank left rates unchanged amid concerns over the health of the eurozone economy, which appears to be heading for a recession in the second half of this year.
ECB president Christine Lagarde noted how earlier interest rate rises were squeezing activity in the economy and said that growth is likely to remain weak over the rest of the year.
The meeting comes after PMI data at the start of the week showed that business activity contracted at the fastest pace in three years. Recent data has also shown that the eurozone inflation is cooling, although it still remains over double the ECB’s target level of 2%.
Christine Lagarde added that it was far too premature to discuss interest rate cuts and insisted that rates would need to stay at these levels for an extended period of time in order to bring inflation back to target.
Today, there is no high impacting eurozone economic data. Investors will continue to digest yesterday’s meeting, which was broadly unsurprising.
The pound pushed high yesterday but has struggled to gain traction across the week commit rising concerns over the health of the UK economy and doubts over whether the central bank can raise interest rates any further.
The Bank of England will meet on Thursday next week and is expected to leave interest rates on hold at 5.25%. However, if the central bank points to weaker economic projections or a lower inflation outlook, then the pound could fool further.
There is no UK economic data due to be released today. Instead, sentiment is likely to drive the pair.
