- Pound (GBP) steadies around a 3-month high
- UK economic calendar is quiet
- Euro (EUR) rises as German trade balance increases
- ECB President Lagarde to speak
The Pound Euro (GBP/EUR) exchange rate is falling after gains in the previous week. The pair rose +1.36% in the previous session, settling on Friday at €1.1676 and trading in a range between €1.1506 – €1.1687. At 09:00 UTC, GBP/EUR trades -0.17% at €1.1653.
The pound is drifting lower after strong gains last week supported by hawkish Bank of England commentary.
The UK economic calendar is quiet this morning, leaving sterling edging lower with geopolitical tensions in focus after a US vessel was attacked in the Red Sea over the weekend. The move has raised concerns of heightened tensions in the Israel-Hamas war hurting the market mood.
Still, the pound remains near a three-month high versus the euro and the US dollar, boosted by comments from Bank of England policymakers last week, including governor Andrew Bailey. Bailey pushed back on rate-cut bets as inflation in the UK has fallen, but it’s still over 2.5 times the Bank of England’s target at 4.7%.
Looking ahead, this week is expected to be a relatively quiet week for the pound with no major UK events marked on the economic calendar, leaving sentiment to drive GBP.
The euros is rising higher after losses last week as the market fully priced in a 25 cut by the ECB in the month of April. Inflation data last week showed that consumer prices cooled by more than expected to 2.4%, raising bets that the ECB will be the first major central bank to start cutting interest rates next year.
The market is pricing in 125 basis points worth of cuts across the coming year, which is keeping pressure on the common currency.
Today, the euro has found a little bit of relief after the German trade balance increased to 1€17.8 billion in October. Attention will now move to the eurozone Sentix investor confidence data, which is expected to improve slightly to -14.4, up from -18.6.
ECB President Christine Lagarde is also due to speak with any comments about the future outlook for the economy or interest rates expected to move the dial. Last week, Christine Lagarde said it was too early to talk about cutting rates.
