Pound Sinks Over USD After Bank of England Cuts Growth Forecast
  • Pound (GBP) holds onto gains from previous week
  • UK CPI & Unemployment data due later in the
  • Euro (EUR) sees no Euros 2020 boost
  • Eurozone economic calendar quiet

The Pound Euro (GBP/EUR) exchange rate is  holding steady at the start of the week. The pair gained 0.46% across the previous week, settling on Friday at €1.1702, just off the weekly high of €1.1718.  At 05:45 UTC, GBP/EUR trades flat at €1.1702

Pound investors shrugged off underwhelming UK GDP data last week. The monthly GDP for May came in weaker than expected at 0.8% growth, down from 2% in April and short of the 1.5% growth forecast. The data suggests that UK economic growth was starting to slow even as the UK continued reopening following lockdown restrictions.

Even so, investors remain hopeful that the UK’s economic outlook is still bright with the easing of further restrictions potentially boosting economic growth further.

Today the government will take the final decision as to whether to press ahead with the easing of further covid restrictions next week. The broad expectation is that restrictions will be eased even though covid cases are elevated at 31,772 new daily cases. The government is arguing that owning to the high rate of vaccinations the link between infection and serious illness has been broken.

Looking ahead there is no high impacting UK data due to be released today. However, things start to pick up by Wednesday with UK CPI inflation data, followed by ILO unemployment figures on Thursday.

The Euro came under pressure last week following the European Central Bank’s strategy meeting last week. The central bank agreed to raise the inflation target to 2%, from just below 2%, and will allow for an overshoot. This was a dovish move by the ECB.

The minutes to the latest ECB were released on Friday and also reinforced the central bank’s current dovish stance dragging on the common currency.

The common currency saw no boost from Italy winning the Euros2020 against England.

There is no high impacting Eurozone data due for release today. Investors will be watching covid developments closely as the Delta variant continues to spread.