- Pound (GBP) falls for a second day
- UK economic calendar is quiet
- Euro (EUR) rises after German consumer morale improves
- Inflation data is due later in the week
The Pound Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell -0.23% in the previous session, settling on Monday at €1.1685 and trading in a range between €1.1678 – €1.1720. At 11:00 UTC, GBP/EUR trades -0.02% at €1.1683.
The pound is slipping for another session amid a lack of high-impacting economic data. The UK economic calendar has been quiet since the PMIs were released last week, giving traders nothing in the way of a fresh catalyst to drive movement.
Broadly speaking, the pound is being supported by expectations that the Bank of England will cut interest rates by less than initially exacted. The market is expecting around 60 basis points worth of cuts from the Central Bank, which is around half what they expected at the start of February.
The market is also confident that the Bank of England will cut interest rates after the European Central Bank, which is giving the pound a bit of an edge.
There is no high-impacting economic data today. Next week sees Finance Minister Jeremy Hunt’s spring budget released, which is likely to make investors slightly nervous after the volatility that was induced by then Prime Minister Liz Truss’s mini-budget for autumn 2022.
However, it is worth noting that market conditions are very different from where they were 18 months ago, so the pound is unlikely to see such volatility.
The euro is gaining as German consumer confidence ticks up in March. According to the research group, GFK, consumer morale improved to -29, up from -29.6 in February, in line with expectations.
Improved confidence comes thanks to rising income expectations and the hope that the ECB will start cutting interest rates soon. Although, sentiment remains subdued on a historical basis due to the weak economic climate.
Last week, the German government cut its forecast for economic growth in 2024 last week to just 0.2% from 1.3%.
Looking ahead, the euro will start focusing on inflation data, with figures from Germany, France, and Spain due on Thursday, and the eurozone-wide inflation data is due on Friday.
