- Pound (GBP) rises after losses last week
- House prices drop, wages grow
- Euro (EUR) looks to EC growth forecasts
- GDP, trade and CPI data due this week
The Pound Euro (GBP/EUR) exchange rate is rising after losses in the previous week. The pair fell -0.81% in the previous week, settling on Friday at €1.1438 and trading in a range between €1.1420 – €1.1564. At 09:00 UTC, GBP/EUR trades +0.06% at €1.1445.
The pound is rising after losses last week. The pound fell last week despite Bank of England governor Andrew Bailey and chief economist Huw Pill insisting that interest rates needed to stay higher for longer in order to tame inflation.
Instead, the pound fell amid concerns that the deteriorating economic backdrop would mean that the Bank of England may need to cut interest rates sooner than initially expected. Data remains mixed, with public sector pay growth expected to rise but housing prices drop.
According to the Chartered Institute of Personnel and Development, employers in the private and public sectors planned 5% pay rises, which would mean that public sector workers were on track for their biggest pay rise since the CIPD survey began in 2012. High wages add inflationary pressures to the economy.
The BoE expects wage growth of 4.25% next year, which was a large part of its decision to keep interest rates at a 15-year high of 5.25%.
Meanwhile, those high-interest rates are negatively impacting the UK housing market as Rightmove revealed that asking prices for British homes have fallen at their fastest pace in five years for the time of year.
Average asking prices fell between 1.7% between October 8th and November 4th, marking a much larger fall than is typical for the pre-Christmas period.
Meanwhile, the euro is easing after gains last week as investors prepare themselves for a busy week for economic data.
This week says the release of eurozone GDP trade data as well as inflation figures for the region.
These data points come after today’s European Commission growth forecasts. The EC downwardly revised growth in its September growth forecasts, dropping to 0.8% for 2023 and 1.4% for 2024. Weak growth forecasts could drag on the euro’s value as investors kid become more convinced that the ECB will need to cut interest rates sooner.